Signs of an altcoin season – Why aren’t we in one yet?

• Altcoins have performed well in a six-month window, but it does not signal an altcoin season.
• The Bitcoin dominance chart could see accelerated gains for altcoin market capitalization.

Bitcoin [BTC] could not shake off its halving blues even though nearly a month had elapsed since the event. Market participants eagerly await a bull run, for both BTC and altcoins.

The altcoin season started in September 2023 and saw a pullback in the past six weeks.

There is plenty more in store for altcoins, but they have already witnessed a decent return in that six-month window. How crazy could the altcoin season get once Bitcoin is well on its way to this cycle’s top?

Replicating the past cycle’s performance

Source: TOTAL3 on TradingView

During the 2020 cycle, the altcoin market capitalization went from $51.2 billion in May 2020 to $1.13 trillion in November 2021.

This was a 21.6x gain, and a similar result during this cycle could put the market cap at $6 trillion.

That sounds like a mind-blowing number compared to $640 billion at press time, but crypto cycles do have a way of ripping up expectations.

Even though altcoins have performed well in recent months, they have competed with Bitcoin for a share of the capital inflows.

This could change once investors are willing to embrace more risk, confident of extended crypto gains, and look to expand their altcoin holdings.

Bitcoin dominance might hold the key

Source: BTC.D on TradingView

The altcoin winds might become dramatically more bullish once the Bitcoin dominance begins to shed. This chart maps what percentage of the total crypto market capitalization Bitcoin has captured.

Once it begins an earnest downtrend, it would indicate participants were more eager to buy altcoins than Bitcoin.

In the past 13 months, Bitcoin’s dominance has slowly climbed higher. This is typical of bear markets and persists till late into the bull run.

The few months when this metric is in a free fall is when the altcoin season truly begins.

Read Ethereum’s [ETH] Price Prediction 2024-2025

Comparing the altcoin market cap chart with the BTC.D chart, we can see that the greatest altcoin gains were made once Bitcoin dominance was in a downtrend.

Therefore, market participants waiting for an altcoin season this cycle could watch out for a fall in Bitcoin’s dominance.