Recently, the spark that began with Bitcoin has spread to altcoins like Ethereum and Ripple. There is growing attention on whether the “altcoin season” — a period of strong altcoin performance — last seen in 2021, might be making a comeback after four years. Altcoins refer to all cryptocurrencies other than Bitcoin.
According to industry sources on the 18th, the top 5 major altcoins by market capitalization have outperformed Bitcoin in weekly returns over the past week.
As of May 16th (according to CoinMarketCap), Ethereum — the second-largest cryptocurrency by market cap — rose 12.02% from the previous week. In contrast, Bitcoin, the market leader, rose only 0.53% during the same period. This means Ethereum gained more than 10 times what Bitcoin did.
Looking back at May 14th, when the market was broadly rising, Bitcoin’s relative weakness becomes even more apparent. On that day, Ethereum’s weekly gain reached 45%, while Bitcoin’s remained around 7%. Ripple and Solana, ranked 3rd and 5th respectively by market cap, also surged more than 20% during the same period.
This kind of divergence is typical of the early stages of an altcoin season. When liquidity starts to shift away from Bitcoin toward altcoins, altcoins often show greater price increases than Bitcoin.
A key indicator of an incoming altcoin season — Bitcoin dominance — is also trending downward. As of yesterday, Bitcoin dominance dropped sharply from 65% to 62% in just one week. Bitcoin dominance refers to the proportion of the total cryptocurrency market capitalization that is made up of Bitcoin.
An increase in Bitcoin dominance indicates capital is flowing mainly into Bitcoin, while a decrease suggests that investors are spreading their capital into altcoins. Therefore, a reversal in Bitcoin dominance could signal the beginning of a full-fledged altcoin season.
In fact, during the last altcoin season in early 2021, Bitcoin dominance plummeted from 70% to below 40%. At the time, major altcoins like Ethereum and Solana saw explosive gains.
On May 14th (local time), crypto media outlet Cointelegraph reported, “A chart tracking the market cap of the top 125 altcoins excluding Bitcoin has broken above a descending trendline that has persisted since January,” adding that, “If this upward trend continues, the chances of an altcoin season beginning are high.”
There are even forecasts that a full-fledged altcoin season could begin as early as next month. João Wedson, CEO of on-chain analytics platform Alphatractal, stated on May 15th (local time), “As Bitcoin dominance has dropped sharply in a week, 37 out of 57 altcoins have outperformed Bitcoin over the past 60 days,” predicting that “altcoin season could officially begin in June.”
However, unlike previous altcoin seasons where almost all altcoins surged indiscriminately, this year’s altcoin rally is expected to be more selective. It may not be as widespread as the broad rally seen four years ago.
