Altcoin Season May Continue as Bitcoin Dominance Drops and Ethereum Outperforms Bitcoin

• Altcoin season is underway as market cap hits $4T and Bitcoin Dominance falls to a multi-month low, signaling capital rotation.

• Analysts suggest exiting when the Altcoin Season Index hits 70+, or when TOTAL3 nears its $2 trillion target via cup-and-handle patterns.

• Key exit clues include ETH outperforming BTC, rising meme coin activity, and BTC.D falling below 50%, often signaling the cycle’s end.

Altcoin season heats up with $4T market cap and Bitcoin Dominance at multi-month lows; key exit signals include Altcoin Season Index and TOTAL3 targets.

Altcoin Investors Have Begun to See Profits in July

Most altcoin investors who started buying in June are likely seeing profits by now. That’s because the altcoin market cap (TOTAL2) has risen by 44% since then, reaching $1.5 trillion.

Glassnode’s proprietary indicator confirms capital rotation into altcoins starting in early July.

Glassnode’s Altcoin Season Indicator. Source: Glassnode

“Glassnode’s proprietary Altseason Indicator fired on July 9. This means stablecoin supplies are expanding, capital is flowing into BTC and ETH, and, simultaneously, the altcoin market cap is rising — a structural environment conducive to capital rotation,” Glassnode reported.

Today, data from CryptoBubbles shows a green market. Many altcoins are up between 10% and over 20%.

Altcoin Price Performance July 18. Source: CryptoBubbles

However, history shows that the late 2024 altcoin season ended in sharp declines. Many altcoins dropped by 50% to 90%. Many investors failed to act quickly and watched their portfolios sink deeper into losses.

That’s why identifying when to take profits is as crucial as identifying when altcoin season begins.

Analysts Recommend 4 Factors to Determine Exit Timing

The simplest and most widely used signal is the Altcoin Season Index. This index is commonly used to identify entry points. But when it hits its upper limit, it also acts as a warning to the broader market.

As of this writing, Coinglass reports that the index is at 49. When it reaches 70 to 100 points, investors are advised to take profits.

Altcoin Season Index. Source: Coinglass

“The Altcoin Season Index is rising, and the altcoin market cap has surged significantly in recent days. When the index reaches above 70, it’s time to sell your altcoins. Right?” — Coinglass reported.

For other investors, technical analysis of the altcoin market cap (TOTAL3) is a guide. Analysts like Peter Brandt and Greeny believe TOTAL3 is forming a cup-and-handle pattern.

TOTAL3 Cup And Handle Model. Source: Greeny

Using the measurement theory of that pattern, TOTAL3 could reach a target of $2 trillion. That may be a key point where altcoin holders should consider exiting.

Some investors track the capital flow cycle to identify when the season might end. For example, investor NekoZ believes the market is now entering the second phase of a four-phase cycle.

The 4-phase capital flow cycle of the crypto market. Source: NekoZ

“ETH has started to outperform BTC in terms of returns, which means we have moved into the second phase of the altcoin season,” NekoZ said.

In this framework:

• Phase 1 is Bitcoin outperforming.
• Phase 2 is Ethereum outperforming Bitcoin.
• Phase 3 sees large-cap altcoins rally.
• Phase 4 is when small-cap altcoins and meme coins pump, often signaling the final stage of the altcoin season.

Many observers closely monitor this progression.

The last factor to consider is Bitcoin Dominance (BTC.D). In July, BTC.D decreased from 65.5% to 61%, marking the largest monthly drop since November 2024. Analysts, looking at trendlines from previous cycles, believe that the altcoin season may continue until BTC.D falls to 48% to 50%.

Bitcoin Dominance. Source: ToraX

Every investor likely has their strategy. However, historical experience shows that holding altcoins for too long often leads to losses, unlike Bitcoin, which tends to recover better. As the market overheats, the risks grow even higher.

Conclusion

Altcoin season’s momentum is clear with strong market cap growth and declining Bitcoin Dominance. Investors should closely monitor the Altcoin Season Index, TOTAL3 patterns, and capital flow phases to optimize exit timing. Recognizing these signals can help mitigate risks and secure profits before potential market corrections. Staying informed and disciplined remains essential in navigating this dynamic crypto cycle.