Although Bitcoin (BTC) is holding up very strongly, most crypto traders are still not entirely happy. Altcoins are underperforming and there is even speculation that this cycle is different, resulting in the lack of altseason. But some indicators suggest that something may be brewing. What’s going on?
Altseason fails due to high Bitcoin dominance
A direct sign of an altseason is Bitcoin dominance. When Bitcoin dominance drops, it is usually accompanied by strong upside moves in altcoins, so many traders eagerly wait for Bitcoin dominance to drop.
Last week, BTC dominance rose to 64%, a cycle high. Currently, dominance is at 61.70%, which remains very high. However, this could be the last phase before dominance actually starts to fall.
Currently, Bitcoin dominance is showing a bearish divergence, with the BTC price reaching a high while the RSI (Relative Strength Index) is forming a lower high. This technical divergence often indicates a top. However, such tops can take time to form, so it remains to be seen when the dominance will actually decline.
Why aren’t altcoins rising?
But what exactly is the reason why altcoins are barely rising at the moment? In this cycle, there seems to be a correlation between the ongoing hype around memecoins and the disappointing performances of most altcoins. For example, last Friday, 52,000 new memecoins were launched on Pump.fun. These memecoins are draining almost all liquidity from the market, preventing altcoins with real-world use cases from rising.
This is also the reason why Ethereum (ETH), the flagship of the altcoin market, continues to disappoint investors. An altseason is almost always accompanied by a rising ETH price, especially relative to BTC. However, at the moment, ETH only seems to be falling against BTC.
In fact, the ETH/BTC ratio has been falling for over two years. The current ETH/BTC rate is around 0.027. During the peak of the bull run in 2021, this ratio reached almost 0.09. As long as ETH does not rise against BTC, an altseason will not occur.
However, during the recent correction, the ETH/BTC ratio fell to a crucial support level from January 2021. There is a possibility that ETH/BTC has finally hit a bottom and could rise again in 2025. If this is the case, 2025 could still be a successful year for altcoin investors.
