Altcoin Season on Pause as Bitcoin Dominance Slips Below Critical Level
Bitcoin’s dominance in the crypto market has broken below a key technical level, reviving speculation around an incoming altcoin season. But analysts at Coinbase caution that confirmation is still lacking — and leveraged excesses may delay any meaningful rotation.
Despite a modest 3% decline from its midweek high of $120,000, Bitcoin (BTC) has remained relatively stable. In contrast, several major altcoins have posted sharp losses. XRP, Dogecoin (DOGE), and Solana (SOL) led Friday’s declines, each dropping roughly 5% on the day. From their Wednesday peaks, XRP and DOGE are down about 18%, while SOL has fallen 12%, according to CoinDesk data.
Broader weakness was evident across mid-cap tokens as well. The CoinDesk 80 Index — which tracks altcoins outside the top 20 — is down 10% from its recent high. Ethereum (ETH), supported by consistent institutional accumulation, has been more resilient, trading 4% below its weekly peak.
Leverage Fuels Volatility
Coinbase head of research David Duong attributed the sell-off to overheated leverage in the altcoin derivatives market. In a Friday note, he pointed to the Altcoin Open-Interest Dominance metric — which compares altcoin derivatives exposure to Bitcoin’s — rising to 1.6, a level that has historically signaled imminent market corrections.
“Leverage across altcoins has stretched too far,” Duong said. “A reset is necessary to restore stability and reduce the risk of deeper shakeouts.”
Altseason Index Cools Amid Pullback
The Altcoin Season Index, which tracks altcoin outperformance relative to BTC on a 0–100 scale, fell to 41 on Friday — down from 59 earlier in the week. That earlier reading marked the strongest signal since January’s speculative frenzy tied to political news.
Still, Duong highlighted that altcoins (excluding stablecoins) have nearly doubled in market cap since April, suggesting strong underlying demand despite short-term pressure.
Dominance Break Needs Follow-Through
Bitcoin dominance — the percentage of BTC’s share of total crypto market value — has dipped below its 200-day moving average for the first time since January. Historically, this move has preceded sustained altcoin rallies, such as in 2021.
However, Duong advised caution. “A decisive and sustained move below the 200-DMA could confirm the start of altcoin season. But until we see consistent daily closes under that level, it’s premature to position aggressively.”
For now, traders are watching closely. The setup for altseason may be forming, but without confirmation, caution still leads sentiment.
