Recently, many rumors have emerged surrounding the possibility of an upcoming altcoin season. Ethereum's performance has recorded exceptional growth. China has just announced an economic stimulus package, while the Federal Reserve is predicted to cut interest rates in September.
However, according to an assessment from an expert at the cryptocurrency exchange Deribit, as reported by Coinbase, the altcoin season is still in a waiting state. The current picture shows more cautious optimism than extreme excitement. Although Ethereum has made a strong breakthrough, it has not yet reached the necessary threshold to confirm this event, and mid-cap and small-cap altcoins still lack the necessary trading volume.
Are macro factors reshaping the market?
For many investors, the altcoin season is likened to a gold rush in the cryptocurrency space. This period marks the market's shift from giants like Bitcoin and Ethereum to a broader array of smaller, more speculative assets, often leading to significant growth spurts.
Current macro factors along with some on-chain indicators have hinted at the emergence of the long-awaited altcoin season.
In a speech at the Jackson Hole Economic Conference, Fed Chair Jerome Powell expressed a more dovish stance on the possibility of interest rate cuts. He stated that "the balance of risks is shifting" which may require an adjustment in the Fed's policy, hinting at the potential for easing measures in September.
Recently, reports have indicated that China has announced a new stimulus package to support its struggling economy. While details are still being clarified, this move is seen as an important step towards easing policy in one of the world's largest economies.
Jean-David Péquignot, Commercial Director of Deribit, emphasized that the convergence of favorable macro policies could be the main factor triggering the altcoin season.
"Central bank easing could reduce yields on safe assets and inject liquidity into the financial system, thereby lowering long-term return expectations. As a high beta risk asset, cryptocurrencies often amplify what is happening in the stock market; when liquidity is abundant, speculative inflows will increase," Péquignot shared with BeInCrypto.
Ethereum's price increase ignites hope
The strong rise in Ethereum's price following Powell's announcement has reflected a recovery in investors' risk appetite. This price action, along with a recent influx of capital into Ethereum spot ETFs, represents significant developments.
According to Péquignot's analysis, Ethereum's outperformance relative to Bitcoin is an important signal for the market as a whole.
"The ETH/BTC ratio often acts as a leading indicator when BTC begins to underperform and investors show increasing appetite for higher-risk crypto assets," he noted, adding that, "[It] can also create a spillover effect, where Ether's outperformance reinforces investor appetite for innovation and stimulates FOMO in the broader market."
Despite these positive signs, they are still not enough to confirm the arrival of a true altcoin season.
Bitcoin remains dominant
A broad market rally is a sign of a true altcoin season, but some key indicators suggest this has not yet occurred. The CoinMarketCap Altcoin Season Index, for instance, measures whether 75% of the top 100 altcoins have outperformed Bitcoin over the past 90 days.
As of the time of this report, the index stands at 44 out of 100.
"The Altcoin Season Index from CMC has rebounded but is still far from the critical level of 75. Many mid-cap and small-cap altcoins are still lagging or trading sideways, showing no clear outperformance," Péquignot noted.
Meanwhile, Bitcoin continues to hold a dominant role in the cryptocurrency market.
"Bitcoin's dominance remains high in the 5-year view at 58%, indicating that BTC is still the key factor driving institutional allocation," Péquignot added.
These indicators suggest that capital is still primarily focused on Bitcoin, which is often considered the safest digital asset. For the altcoin season to truly arrive, these indicators will need to change.
The necessary factors to kickstart the altcoin season
Although recent news has generated significant momentum, Péquignot is still waiting for a combination of all factors to align before he confidently makes a decision. He explains that a true altcoin season is signaled by a series of events confirming a widespread change in investor behavior.
"A breakout of the ETH/BTC ratio signals prolonged BTC underperformance; a decisive drop in BTC dominance, indicating clearer capital rotation; the Altcoin Season Index pushing towards 75, confirming a broad expansion of altcoins; and larger retail capital flows evidenced by on-chain activity, social media engagement, and greater altcoin trading volume," he explained.
This broad capital rotation, combined with favorable winds from the strongest economies in the world, may be enough to redirect liquidity into altcoins. However, even with these positive developments, the path ahead is not without risks.
The final triggering factors and potential pitfalls
Several factors could derail a potential bull run. For example, changes in central bank policy could reverse the current trend.
"Sudden high inflation figures could force central banks to pause or reverse easing sooner than expected, which would affect risk assets and revert capital rotation," Péquignot said.
He also warned that the momentum of the cryptocurrency market, especially the use of high leverage, could lead to sharp corrections.
"When altcoin rallies are influenced by the greed of retail investors and large leverage, crowded or disappointing investment stories can lead to profit-taking or stop-loss measures, triggering liquidations that could shorten any altcoin season," Péquignot emphasized.
Additionally, the ongoing imposition and reversal of U.S. trade tariffs continues to create uncertainty for investors. Such an environment could quickly dampen altcoin demand.
The waiting game
The altcoin season will need more time to wait this year. Although it has not yet arrived, the conditions are gradually forming.
A strong combination of macro winds and Ethereum's recent price surge has provided the strongest signals to date that the market is beginning to change. However, all the necessary indicators to confirm such an event have yet to be met.
The waiting game continues, but for the first time in a long while, the pieces for the next cryptocurrency gold rush seem to be gradually coming together.