The "altseason" indicator is off the charts, but analysts warn: the rally may be false.
A key market indicator, the Altcoin Cycle Signal, has re-entered the zone traditionally associated with "altcoin season." However, as my calculations show, the current signal is far from the classic understanding of this term. The main driving force was not organic growth of alternative coins, but a sharp decline in the price of Bitcoin (BTC).
Typically, such a signal means that altcoins are rising while Bitcoin holds its positions and attracts buyers, without draining all market liquidity. Now, however, we see a different picture.
Bitcoin's Weakness as a Catalyst
The Altcoin Cycle Signal exceeds the value of 50 when altcoins outperform Bitcoin. Currently, its level reaches 86, which formally indicates the peak of "altseason." However, according to on-chain analytics, sellers have virtually ceased transactions after two years of intense pressure, but Bitcoin is still continuing to decline in price. As experts rightly noted, "Bitcoin is still doing the heavy lifting right now."
Over the past month, Bitcoin has lost 18% of its value. The correction began amid pressure on risk assets due to the hawkish stance of the U.S. Federal Reserve and market fears that rates could remain or even rise. Bank of America expects the Fed to raise rates three times this year. Rate hikes traditionally hit risk assets: loans become more expensive, financial conditions tighten, and investor interest in speculative instruments like cryptocurrencies declines.
However, not all experts share this forecast. According to Grayscale's Head of Research, Zach Pandl, the company's base case scenario assumes the Fed will refrain from further hikes. In this case, easing concerns about monetary policy tightening could support Bitcoin and other digital assets—especially if global financial markets maintain positive momentum.
"Bitcoin and gold have shown weaker performance compared to stocks since the start of the Iran conflict—partly due to expectations of Fed policy tightening. However, if the probability of rate hikes decreases—which is what we adhere to in our base case—Bitcoin could catch up with stocks," the company's blog stated.
Classic Altseason is a Thing of the Past
Glassnode noted that the current Altcoin Season indicator is largely explained by the decline in the price of the leading cryptocurrency. A recovery in BTC could confirm the signal: then altcoins would rise with a strong Bitcoin, not just amid its weakness.
High indicator values do not yet mean widespread growth. Many experts, including Bitwise Chief Investment Officer Matt Hougan, believe the era of classic altcoin rallies is over. "I don't think we'll see the usual growth of all assets together. Rather, we're in for an unconventional altcoin season," he stated.
CryptoQuant CEO Ki Young Ju added that "a new narrative is no longer enough" for altcoins. He believes only projects with real revenue and a working business model will survive.
My opinion: The market is entering a phase where Bitcoin's "rising tide" no longer lifts all boats. Investors should expect not a broad rally, but targeted growth only among the strongest projects with fundamental value. The current signal is more of a warning about structural changes than a call to blindly buy altcoins.