Altcoin Rally Poses Competition to Bitcoin—Yet Fraud and Hype Raise Concerns

The Altcoin Season Index has jumped to 71, reflecting increased confidence among experts that the crypto market could be shifting away from an

(ETH)-centric period toward a wider altcoin surge. Generally, when this index surpasses 75, it marks the onset of an "altseason," during which 75% of the top 50 altcoins outperform over a 90-day span. Although the index hasn't yet reached this point, its swift rise from 59 to 71 in just one day has fueled speculation about funds moving from Bitcoin into smaller altcoins. According to Blockchain Center, this sharp increase mirrors trends seen in earlier bull runs, such as the 2017 rally that followed a lengthy consolidation period.

Bitcoin dominance (BTC.D), which measures Bitcoin’s proportion of the total crypto market value, has dropped below important support thresholds—a sign that often precedes heightened altcoin activity. Merlijn The Trader, a well-known analyst, pointed out that this decline is happening quickly, not gradually, echoing patterns from previous altseasons. "Every cycle, this marks the same outcome: Bitcoin cools. Alts ignite. Rotation isn’t coming. It’s already here," he shared on X. This trend matches technical signals such as a falling wedge in altcoin charts, a confirmed breakout, and ongoing accumulation phases.

Looking back, similar scenarios have led to strong altcoin rallies. In 2017, altcoins soared after a period of sideways trading, kicking off one of crypto’s most notable bull markets. The current environment shows comparable signs, with investors slowly preparing for a possible breakout. Crypto investor Lark Davis observed that altcoins are breaking out of a triangle pattern, hinting at upward momentum. "RSI isn’t overheated, and timing lines up perfectly with a BTC →

→ alts rotation," Davis commented, referring to the capital flow from Bitcoin to Ethereum and then to altcoins.

Still, some analysts warn that this phase may not play out like previous cycles. Market commentator Altcoin Vector noted that the movement from Ethereum to lower-cap altcoins could indicate declining interest in the broader market, a pattern that sometimes leads back to Bitcoin dominance. "But this isn’t the full picture. The phase could return to ETH once its accumulation process completes—compression is building, and ETH may be setting up for the next leg," Altcoin Vector explained. This highlights the complex nature of capital movement, where enthusiasm for small-cap tokens can exist alongside periodic shifts back to Bitcoin or Ethereum.

The recent spike in the Altcoin Season Index has also raised alarms about speculative trading and scams. Simon Dedic from Moonrock Capital cautioned that while genuine altcoin rallies are happening, tokens with exaggerated valuations and weak fundamentals are also seeing price surges. "We’re entering altseason, but scams will pump the hardest. Tokens like MYX or IP are clearly just well-executed low-float/high-FDV extraction plays," he warned. This highlights the importance of vigilance, as the 2025 market differs from previous cycles, with speculation now more focused on small-cap tokens rather than widespread altcoin adoption.

Seasoned market participants also point to structural changes in the altcoin bull market. Gareth Soloway remarked that today’s "altcoin bull market" has shifted from crypto to small-cap equities, often driven by exaggerated claims about use cases. "The recipe for a 1000%+ daily gain is to buy an altcoin and claim it will be a reserve currency or the use case leader," he said, noting the increasing overlap between crypto and traditional speculative markets.

As the Altcoin Season Index nears crucial levels, the relationship between technical signals, Bitcoin’s market share, and investor mood will shape the market’s direction. While past trends point to the possibility of major altcoin gains, the presence of speculative excess and regulatory uncertainty calls for a cautious approach. Experts advise investors to keep an eye on on-chain data, Bitcoin ETF inflows, and broader economic trends to navigate the shifting landscape. The next few months will reveal whether this altseason will repeat history or mark a new chapter in crypto market evolution.

Source: [1] Altcoin Season Incoming? Key Crypto Rotation Signals Flash