The "altcoin season" indicator has been activated, but the signal turned out to be false: analysis by Cryptalist
The cryptocurrency market has once again found itself at the center of conflicting signals. The Altcoin Cycle Signal indicator from Glassnode, widely used to determine phases of altcoin dominance, has entered the "altcoin season" zone. However, unlike classic scenarios, the current surge in the index is driven not by organic growth of alternative coins, but by a sharp decline in the price of Bitcoin (BTC).
Typically, when this indicator exceeds the 50 mark, it means altcoins are outperforming Bitcoin in terms of growth rate. Now, its value has reached 86, which formally indicates the peak of altseason. But, as analysts note, sellers in the altcoin market have nearly exhausted their potential after two years of intense pressure. Nevertheless, Bitcoin continues to decline, and it is this factor that distorts the real picture.
Bitcoin's Weakness as a Driver for Altcoins
The main reason for the signal's activation is not the strengthening of altcoins, but the weakening of Bitcoin. Over the past month, BTC has lost 18% of its value. The correction began against the backdrop of the Federal Reserve's hawkish stance and market fears regarding the maintenance or even increase of interest rates. At Bank of America, for example, three rate hikes are expected this year. Such a policy traditionally hits risk assets, including cryptocurrencies.
However, not all experts share this pessimistic forecast. At Grayscale, for instance, they adhere to a baseline scenario in which the Fed refrains from further hikes. If concerns about monetary policy tightening ease, Bitcoin and other digital assets could receive a powerful boost for recovery. In that case, if BTC starts to rise and altcoins follow suit, the "altcoin season" signal would be confirmed on a healthy basis.
High indicator values themselves do not guarantee a universal rally. Experts, including Bitwise Chief Investment Officer Matt Hougan, believe that the era of classic altcoin rallies, where all assets grew synchronously, is over. CryptoQuant CEO Ki Young Ju also emphasizes that "a new story is no longer enough" for altcoins. Only those projects with real revenue and a working business model will survive.
My professional opinion: The current situation is a classic example of a "false season," driven not by the strength of altcoins but by the weakness of Bitcoin. Investors should not blindly trust this signal. A real altseason will only begin when Bitcoin finds a bottom and starts a confident recovery, and capital begins to flow into projects with fundamental value. Until then, this is merely a reflection of market uncertainty.