Altcoins Market Cap Surges 40% In Q2, Altseason Speculation Grows

In the second quarter of this year, the total market capitalization of altcoins, excluding Ether (ETH), surged by $126 billion. This significant increase has sparked speculation among analysts about the potential onset of an altseason, a period characterized by substantial gains in altcoins. Crypto analyst Javon Marks highlighted a chart comparing the TOTAL3 index, which represents the total market cap of altcoins excluding Bitcoin (BTC) and Ethereum, against the US money supply. This comparison suggests that altcoins may be on the brink of a major rally, potentially rivaling the explosive bull run of 2017.

Marks noted that the recent bounce of altcoins off a critical retest level following a breakout indicates a strong upward momentum. He emphasized that this movement could deliver one of the most powerful runs for altcoins since 2017. Similarly, anonymous crypto trader Moustache shared an analysis on X, highlighting a weekly inverse head-and-shoulders pattern in the TOTAL3 chart. This pattern, a bullish reversal indicator, suggests a rally, with the analyst forecasting "much higher levels" for altcoins. The pattern mirrors the 2021 altcoin season when top altcoins surged 174% against Bitcoin’s 20% during the final leg.

While some analysts are optimistic about the altcoin rally, others approach with caution. Technical analyst Crypto Scient explained that the recent rise in altcoin market cap has yet to reflect a higher time frame (HTF) bullish trend shift. The analyst noted that the TOTAL2 trend remained bearish after hitting resistance at the $1.25 trillion level, suggesting that the market is still in a distribution phase. Similarly, crypto commentator DonaXBT argued that a significant breakdown in Bitcoin's dominance trendline is essential for altcoins to experience a substantial move. The accompanying chart reveals that Bitcoin dominance is above 60%, with the weekly uptrend still intact. According to the analyst, a decline below the 60% level, followed by a retest of the support zone between 56% and 58%, could serve as the initial catalyst for a full-fledged altcoin season to emerge.

Despite the lower trading volumes, market observers see this as a precursor to significant growth, suggesting that altcoins have yet to reach their peak momentum. The Altcoin Season Index, currently at 24, further supports this outlook by confirming that the market is in Bitcoin season. Historically, an index below 25 indicates Bitcoin dominance, but this can be a positive setup for altcoins. When the index climbs above 30-40, altcoins often experience significant pumps, driven by capital rotation from Bitcoin. With trading volumes showing early signs of recovery and the Altcoin Season Index pointing to a shift, investors’ optimism for an altcoin rally is growing.