XRP, DOGE, and SOL Lead Crypto Sell-Off, but Altcoin Season Still Happens
A Coinbase analyst noted that Bitcoin's dominance has lost a key level, and confirmation could spark a broader altcoin season.
While Bitcoin
$117,420.40
Despite a modest decline in Bitcoin prices, other major cryptocurrencies have fallen over the past few days, casting doubt on the durability of the so-called altcoin season.
#XRP$3.1235
DOGE$0.2353
CoinDesk data showed that Solana's SOL (SOL) and the top 10 cryptocurrencies were both down on Friday, each declining by about 5% over the past 24 hours. Since their highs on Wednesday, XRP and DOGE have fallen by about 18%, while SOL has fallen by 12% over the same period. The CoinDesk 80 Index, which includes tokens of mid-cap companies outside the CoinDesk 20 Index, lost 10% from its weekly peak.
Meanwhile, Bitcoin (#BTC🔥🔥🔥🔥🔥 ) was trading around $116,000, down just over 3% from its midweek peak of $120,000. Ethereum ($ETH ) was down 4% from its weekly high, supported by a steady buildup by cryptocurrency treasury strategy firms.
When is altcoin season?
The sharp selloff of the past few days followed weeks of heavy capital flowing into smaller cryptocurrencies, sparking speculation that altcoin season had begun. This period, sometimes known as altcoin season, occurs when smaller, riskier cryptocurrencies outperform Bitcoin, the leading cryptocurrency, for a long time.
CoinGlass' Alcoin Season Index, which measures the altcoin market's dominance against Bitcoin (BTC) on a scale of 0 to 100, fell to 41 on Friday from 59 on Monday, the strongest reading since the speculative frenzy in late January surrounding President Trump's inauguration.
However, the overall altcoin market (excluding stablecoins) has seen a rapid rise, nearly doubling in value since April, according to David Duong, head of research at Coinbase, in a report released Friday.
The report indicated that this week's decline was due to traders being overly leveraged in altcoin bets.
The report noted that the altcoin Open Interest Dominance (OI) index, which compares the dollar volume invested in altcoin derivatives contracts to Bitcoin contracts, rose to 1.6, a level that preceded previous market tremors. Duong wrote that the decline in this index indicates a healthy recalibration of leverage in the altcoin market, otherwise further tremors are expected.
For an extended altcoin season, investors should monitor the Bitcoin Dominance Index, which measures Bitcoin's share of the total cryptocurrency market capitalization. The report noted that this index has fallen below its 200-day moving average for the first time since shortly before January 2025
"A sustained move below the 200-day moving average could validate the 'altcoin season' narrative and has historically preceded multi-week periods of altcoin outperformance (such as 2021)," Duong wrote.
However, traders may be better off waiting for more consecutive sessions of sub-par closes before entering altcoin bets for a "more prudent position," he added.
