Altcoins’ roaring returns and falling USDT stablecoin dominance suggest ‘altseason’ is here
Key Takeaways:
Declining Bitcoin dominance and rising strength in altcoins and memecoins could be a sign that it’s altseason.
USDT dominance could drop to 2022 lows, indicating an accelerating capital rotation into Bitcoin and other cryptocurrencies.
The cryptocurrency market shows signs that an altseason, a period where altcoins significantly outperform Bitcoin (BTC), could be on the horizon. Technical charts and market sentiment align to suggest that May 2025 might start a broader altcoin rally, driven by key indicators and shifting capital flows.
The TOTAL2 chart, representing the total market capitalization of all cryptocurrencies, excluding Bitcoin, has broken above a downtrend line in place since January 2025. This breakout is accompanied by a bullish break of structure (BOS) on the daily chart, forming higher-low patterns.
A decisive move above the $1.25 trillion resistance level could support a decisive uptrend comprised of higher lows and higher highs. This shift signals capital rotation from Bitcoin into altcoins.
Similarly, the Bitcoin Dominance (BTC.D) chart is signaling a potential market peak, having declined 4% over the past six days—the steepest drop since November 2024. A falling BTC.D typically indicates capital flowing from Bitcoin to altcoins, enabling altcoins to gain market share and drive collective price surges.
Michael Van Poppe, founder of MN Capital, highlighted this trend, noting a bearish divergence accompanied by declining volume. The analyst said,
“Strong bearish divergence on the weekly timeframe, indicating that the #Bitcoin dominance has peaked. The end of the bear market for #Altcoins.”
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USDT dominance could dip to new lows
The tether (USDT) dominance chart has dropped to its lowest level since early February, at 4.59% on May 13. As illustrated below, the USDT.D chart may find support around 3.90%, as it exhibits a descending triangle pattern. A bearish breakout could lead to new lows since 2021, matching previous altseason levels.
USDT dominance declines imply capital rotation occurs in other assets like Bitcoin and altcoins. Over the past seven days, Ether (ETH), XRP (XRP) and Solana (SOL) have gained 44.3%, 20.6% and 22% respectively, compared to BTC’s 10% rise.
Complementing the recovery with a deeper analysis, crypto trader ZERO IKA observed that many altcoins have formed a higher time frame break of structure above their February and March highs.
The analyst noted that despite recent upside, most altcoins remain 70% to 90% below their all-time highs, indicating a "relatively early" opportunity for a recovery.
The weakening stablecoin and Bitcoin dominance, coupled with a rise in altcoin market cap, opens the door for an altseason, as long as the above key trends remain intact.
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