FameEX Hot Topics | Altcoins Surge as USDT Dominance Drops: Is ‘Altseason’ Upon Us?

USDT dominance has experienced a notable drop, coinciding with a rise in the market capitalization of key altcoins, sparking speculation that an "altseason" might be on the horizon. 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 marked the highest weekly close since Sunday, surpassing the previous peak in market capitalization seen in 2021. Traders often monitor the TOTAL3 chart as a key indicator of altcoin market health, as it offers insights into capital rotation patterns and the overall strength of the altcoin ecosystem.

The rise in the market cap of altcoins comes at a time when USDT dominance over the past week, dropping from 4.74% to 4.18%. Such a decline in Tether’s market share often signals that investors are moving their capital away from stablecoins and into riskier assets, looking for higher returns as market sentiment becomes more bullish. If USDT dominance drops below 4%, it would match the lowest level seen since January 2025. This shift in capital flow has fueled speculation that an altcoin rally, or “altseason,” could be underway.

Crypto trader Honey has also voiced a bullish outlook, pointing to a breakout from a cup-and-handle pattern on the weekly chart. Honey expressed confidence, stating, "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 sentiment has added fuel to the growing anticipation of a strong altcoin market rally in the near future.

Performance data among the top 100 crypto assets further supports this bullish thesis. Over the past three months, altcoin momentum has decisively accelerated, with cumulative returns outpacing Bitcoin's by more than sixfold. While Bitcoin continues to serve as the anchor of the market, the increased capital rotation into riskier altcoins is a sign that an altseason may be forming. This trend highlights the growing strength and complexity of the current altcoin cycle.

Despite the positive indicators, not all metrics are fully aligned yet. Currently, only 60% of the returns in the top 100 crypto assets have come from altcoins, which is below the typical 80% to 90% range that defines a fully established altseason. The altcoin season index has also climbed to 69%, nearing the critical 75% level that would confirm widespread altcoin dominance. However, caution is warranted, as a recent report from CryptoQuant revealed that $4 billion in ERC-20 stablecoins have been withdrawn from exchanges since September 22. Large withdrawals often follow market gains, suggesting that investors may be taking profits and moving capital off exchanges. This reduction in stablecoin reserves could limit buying power, making the market more susceptible 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.