The influence of Bitcoin on the $4 trillion cryptocurrency market may be weakening, but it is still too early to assert that this will lead to a sustainable bull cycle for altcoins – according to Adrian Fritz, head of research at the Swiss asset management company 21Shares, in an interview with Decrypt last Friday.
Although the prices of many altcoins are rising sharply, Fritz stated, “there still needs to be a clear trend reversal” in Bitcoin's dominance level to truly kick off what is called an “altcoin season.”
As of today, Bitcoin's market capitalization reached $2.3 trillion, equivalent to about 61% of the entire cryptocurrency market, according to data from CoinGecko. Last month, Bitcoin's dominance peaked at 65.5% among more than 17,000 cryptocurrencies monitored by this platform.
The recent decline occurred as the prices of Ethereum and XRP rose 20% to $3,600 and 23% to $3.46 respectively in the past week, with XRP hitting a new all-time high. Meanwhile, meme coins like Bonk (on Solana) and Floki (on Ethereum, BNB Chain) both saw increases of more than 45%.
Nearly 60% of Myriad Markets users predict that Ethereum will hit a new peak this year.
In previous market cycles, altcoins often showed strength after Bitcoin's price peaked. This trend indicates that traders tend to shift to higher volatility assets during bull markets to seek larger profits. However, the cryptocurrency market has changed significantly in recent years.
One of those changes is the introduction of spot Bitcoin ETFs in the U.S. – this product does not allow investors (whether individual or institutional) to easily transition to other on-chain assets.
“It is hard to imagine that Bitcoin's dominance ratio will fall to levels seen in previous bull cycles,” Fritz noted. “Throughout the past year, attention has certainly been focused on Bitcoin.”
Fritz also added that if the U.S. Federal Reserve (Fed) cuts interest rates – if it happens by the end of this year – it will be a “major catalyst” for altcoin season as that could inject additional liquidity into the market. However, until there is a clear change in the macro environment, he believes the current market is just going through “a bit of temporary excitement.”
In agreement, Akshat Vaidya – the investment director of the venture capital fund Maelstrom – also stated that “we are witnessing initial signals of altcoin season, but it hasn’t truly started yet.”
As U.S. President Donald Trump has just signed the GENIUS Act, some investors may be quickly reacting to the advantages this new law brings to the cryptocurrency market.
Current Fed futures contracts show that investors do not expect the U.S. central bank to cut interest rates before September – according to data from CME FedWatch.
However, there are still some signals indicating that altcoin season may be approaching – such as the Altcoin Season Index from CoinMarketCap, which tracks the performance of the top 100 cryptocurrencies over the last 90 days. On Thursday, this index hit 47 before dropping to 43 on Friday. A value of 100 indicates that an altcoin season is fully underway.