Alt season or the next scam? Experts have yet to find common ground.

Many market experts are optimistic about the return of an "altcoin season" – a period when small cryptocurrencies outperform Bitcoin. The decline in Bitcoin's dominance market share, along with the outstanding performance of some recent altcoins, seems to signal a wave of movement towards higher-risk assets.

However, a recent analytical report has raised doubts about the sustainability of this price increase, warning that the expectations of a real altcoin season may not materialize.

Altcoin growth but lacks solid foundation

According to a report from Matrixport, analyst Markus Thielen stated that the recovery momentum of altcoin still carries many risks. Despite numerous predictions for a new bull cycle, there have only been two short-term growth spurts recently, the most notable being in Q4/2024.

These rallies are often accompanied by a temporary spike in funding rates but lack fundamental support from cash flow and market structure, leading to rapid reversals.

Thielen said:

"The current move is repeating previous patterns. The funding rate falling indicates that the level of excitement has cooled down, and the altcoin market remains structurally weak. Investors expecting a stable price increase may continue to be disappointed."

Mixed signals from the market

While Matrixport appears cautious, SwissBlock's "Altcoin Vector" report presents a more positive perspective. According to the report, "smart money" is quietly shifting into altcoin positions before retail money recognizes the opportunity, indicating that the market may be in the initial accumulation phase for a major price increase.

SwissBlock emphasizes that:

"This is not yet a clear breakout. However, the momentum and market structure are gradually improving, opening up strategic opportunities for savvy investors before the overall trend becomes optimistic."

Signals from USDT and the fall of Bitcoin

Moreover, some observers believe that the dominance of USDT is at a critical stage. After nearly two years of fluctuating in a descending triangle pattern, USDT seems poised to break out of the accumulation zone. A decline in USDT's dominance often signifies that capital is leaving stablecoins and flowing into riskier assets – a strong catalyst for the upward momentum of altcoin.

At the same time, the dominance of Bitcoin has fallen to around 61%, a level often viewed as a precursor to an altcoin season when smaller tokens start to outperform BTC.

BTC.D Chart | Source: TradingViewAlthough the current signals are not enough to confirm that an altcoin season is underway, signs such as smart capital flowing into altcoins, the fall in the dominance of Bitcoin and USDT, along with the increasing market momentum are further reinforcing hopes for an upcoming growth phase.

However, experts warn that investors need to remain cautious, as the altcoin market still lacks strong foundational support and recent growth has largely been speculative in nature.

Is this just the "overture" or is a real altcoin season approaching? The answer may soon take shape in the coming months.

Annie