With summer on the horizon, investors are watching closely to see if the digital asset market is about to enter “altseason.” Altseason refers to periods when the overall performance of altcoins surpasses that of Bitcoin. During these times, capital typically shifts from Bitcoin to alternative assets with higher upside potential, driving collective rallies across the altcoin sector. For newcomers, spotting the early signals of altseason can help seize opportunities while effectively managing risk.

What Is Altseason?

Altseason is not an official classification. Instead, it’s a market-driven cycle: When Bitcoin’s price stabilizes or consolidates and investor sentiment turns bullish, some capital flows into smaller, higher-return tokens, which leads to sector-wide surges among altcoins. Historically, every bull market is marked by Bitcoin first anchoring new highs, followed by the exuberant run of altseason.

Macroeconomic Drivers of Altseason

In the second half of 2025, the Federal Reserve has repeatedly suggested it may start cutting rates in September to address slower economic growth and easing inflation. This outlook has fueled rallies in U.S. stocks and commodities and generated bullish expectations for the crypto market. As rate cut expectations grow and funding costs fall, investor risk appetite typically rises, prompting a shift from stable assets like Bitcoin to higher-risk, higher-reward altcoins.

Current Performance of BTC and ETH

• Bitcoin is holding near $114,000, with a daily gain of about 1.0% (closing price on August 4, 2025: $114,178).
• Ethereum has rebounded to $3,562, up roughly 2.5% on the day, with a notable increase in on-chain activity.

When Bitcoin and Ethereum show stable upward or sideways movement, it often signals broad market confidence, encouraging more capital to flow into altcoins in pursuit of higher returns.

Bitcoin Dominance: The Key Indicator

Bitcoin dominance is a leading metric for tracking the onset of altseason. When Bitcoin dominance drops below 60% from higher levels, it signals capital rotation into altcoins. Currently, Bitcoin dominance is around 63.5%. If it breaks below 60%, that may signal the true arrival of altseason.

On-Chain and Market Sentiment Metrics

• Capital Flows: Watch long and short position data from CoinGlass and other options markets. When net long interest drops and leveraged activity shifts from Bitcoin to Ethereum and altcoins, it signals realignment of capital flows.
• Social Sentiment: Monitor the Crypto Fear & Greed Index. When the index enters the “greed” range and social media buzz about altcoins spikes, that often marks the start of altseason.
• Altcoin Season Index: This index tracks how many of the top 30 or 100 altcoins outperform Bitcoin over 90 days. If it stays above 70 for three consecutive weeks, that’s typically the peak of altseason.

Altcoin Opportunities and Risks

Opportunities:

• Sector leaders, including Ethereum Layer-2 projects, DeFi tokens, and popular NFT gaming coins.
• Emerging, low-cap altcoins reversing off the bottom may yield 5–10x returns during a rally phase.

Risks:

• Projects with low maturity and poor liquidity are especially vulnerable to rug pulls and pump-and-dump schemes.
• If macro liquidity or regulatory expectations shift, altseason can end abruptly.

How Newcomers Can Position and Defend

• Asset Allocation: Place 60% in Bitcoin and Ethereum, and diversify the remaining 40% across 3–5 promising altcoins.
• Phased Entry: Scale in as Bitcoin dominance drops and the Altcoin Season Index breaks key levels.
• Profit-Taking and Stop-Loss: Set take-profit targets between 30–50% and stick to them; cut positions if the market falls below primary support.
• Focus on Fundamentals: Select altcoins with real use cases and solid teams to minimize “exit liquidity” risk.