FameEX Hot Topics | Altcoin Prices Climb with Declining USDT Dominance: Has ‘Altseason’ Arrived?

USDT dominance has seen a significant decline recently, which coincides with a rise in the market capitalization of altcoins, sparking speculation that an "altseason" may be underway. On Monday, the TradingView ticker TOTAL3, which tracks the market capitalization of all cryptocurrencies excluding Bitcoin and Ethereum, reached a new all-time high of $1.18 trillion. This represented the highest weekly close since Sunday, surpassing the peak market cap seen in 2021. TOTAL3 has become a critical chart for traders to gauge the health of the altcoin market, as it reflects capital rotation patterns and the overall strength of the altcoin ecosystem. A rise in this metric often signals increased interest in altcoins and suggests a shift in investor sentiment toward riskier assets.

This increase in the market capitalization of altcoins comes at a time when the dominance of Tether (USDT) the past week, from 4.74% to 4.18%. A drop in USDT dominance is commonly interpreted as an indication that investors are moving capital out of stablecoins and into riskier assets, looking for higher returns as the market sentiment turns more bullish. If USDT dominance continues to decline and falls below 4%, it would match the lowest level seen since January 2025. This change in capital flow has fueled speculation that an altcoin rally, often referred to as "altseason," could be approaching. As investors shift focus away from stablecoins and toward altcoins, the market appears to be undergoing a transformation, with altcoins gaining increasing attention.

Crypto trader Honey also shares an optimistic view, citing a breakout from a cup-and-handle pattern on the weekly chart as a strong bullish signal. Honey expressed confidence in the upcoming rally, saying, "We have officially broken out of the cup and handle, which is extremely bullish for our beloved altcoins. Expect fireworks in the coming weeks. TOTAL3 to $1.6T." This positive outlook aligns with the growing anticipation that altcoins will play a significant role in the market's near-term future, potentially marking the beginning of a strong altseason.

Performance data from the top 100 crypto assets supports the bullish view, showing that altcoin momentum has accelerated significantly over the past three months. Cumulative returns from altcoins have outpaced Bitcoin’s by more than six times, indicating a shift in capital flow from Bitcoin to altcoins. While Bitcoin continues to anchor the market, the increased capital rotation into riskier altcoins is seen as a sign that an altseason is starting to form. This trend highlights the growing strength of altcoins and suggests that they are becoming a more prominent force in the broader cryptocurrency market.

However, not all indicators are fully aligned to confirm the start of a definitive altseason. While the performance of altcoins has been impressive, only 60% of the returns among the top 100 crypto assets have come from altcoins, which is below the typical 80% to 90% range that usually characterizes an established altseason. Additionally, the altcoin season index has risen to 69%, nearing the critical 75% threshold that would confirm widespread dominance of altcoins. Despite these promising signs, caution is still advised. Recent data from CryptoQuant revealed that $4 billion in ERC-20 stablecoins have been withdrawn from exchanges since September 22. Such large-scale withdrawals often occur after market gains, suggesting that investors are taking profits and moving capital off exchanges. This reduction in stablecoin reserves could limit buying power, making the market more vulnerable to short-term price dips.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.