Altcoin Season Hopes Waver as Bitcoin Dominance Breaks Key Support
Bitcoin’s market dominance has slipped below a major technical level, stirring speculation of an incoming altcoin season. But analysts at Coinbase say confirmation is still needed before traders jump into riskier tokens.
While Bitcoin (BTC) dropped just over 3% from its midweek high of $120,000, altcoins saw deeper losses. XRP, Dogecoin (DOGE), and Solana (SOL) led Friday’s declines among the top 10 cryptocurrencies, each falling around 5% in the last 24 hours. From Wednesday’s peak, XRP and DOGE are down roughly 18%, and SOL has lost 12%, according to CoinDesk data.
Mid-cap altcoins also came under pressure. The CoinDesk 80 Index — which tracks tokens outside the top 20 — declined 10% from its weekly high, reflecting broad weakness in the altcoin market. Ethereum (ETH) performed slightly better, trading about 4% below its recent high, supported by steady institutional accumulation.
Overheated Leverage Behind the Drop
David Duong, head of research at Coinbase, attributed the pullback to excessive leverage in the altcoin derivatives market. In a report Friday, he noted that the Altcoin Open-Interest Dominance — a ratio comparing altcoin and bitcoin derivatives positions — surged to 1.6. Historically, this level has preceded sharp market corrections.
“A reset in leverage would improve conditions for altcoins,” Duong said. “Otherwise, more volatility is likely.”
Altcoin Momentum Fades
The CoinGlass Altcoin Season Index, which measures how altcoins are performing relative to BTC, fell to 41 on Friday from 59 earlier in the week — its highest level since January’s speculative trading surge. Despite the decline, altcoins (excluding stablecoins) have nearly doubled in value since April, signaling strong interest even amid the selloff.
Bitcoin Dominance Drop: A Signal or a Head Fake?
The spotlight now turns to Bitcoin’s dominance, which dropped below its 200-day moving average for the first time since January. This key level has historically marked the beginning of multi-week altcoin rallies — most notably in 2021.
“A sustained move below the 200-DMA could validate the altcoin season thesis,” Duong wrote. “But for now, it’s more cautious to wait for multiple closes under that level before making aggressive altcoin allocations.”
For traders, the message is clear: the setup for altseason is forming — but without confirmation, chasing altcoins may still be premature.
