Is Altseason Coming? Bitcoin Dominance Drops as Altcoins Rise

Key Takeaways

* Declining Bitcoin dominance and rising strength in altcoins and memecoins could be a sign that it’s altseason.

* The TOTAL2 chart, which measures the total market cap of all cryptocurrencies excluding Bitcoin, has broken above a key downtrend line.

* As stablecoin dominance drops, capital is rotating 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.

Breaking structure on TOTAL2

The TOTAL2 chart, which represents 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, setting the stage for a decisive move above the $1.25 trillion resistance level.

The breakout could support a decisive uptrend comprised of higher lows and higher highs, shifting capital 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 on the four-hour chart. The analyst said,

"Still ranging, but seems like we're getting close to making a move. Wouldn't mind seeing some more volume come in on this timeframe, but otherwise, we're slowly moving towards lower highs and lower lows."

As stablecoin dominance drops, capital rotates into Bitcoin and other cryptocurrencies.

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.

The declines in USDT dominance suggest that capital is rotating out of stablecoins and into other assets, such as 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.