Historical Setup Signals an Incoming Altcoin Season

The Market Cycle Is Shifting: Altcoin Season 2025 Is Brewing

The cryptocurrency market is cyclical, and history has shown that Bitcoin dominance (BTC%) and altcoin performance are inversely correlated during bull runs. As we approach October 2025, the data suggests a high probability of an altcoin season emerging, driven by a confluence of on-chain metrics, capital flow patterns, and macroeconomic catalysts.

Bitcoin Dominance: From Gateway to Store of Value

In 2017, Bitcoin dominance plummeted to historic lows during the ICO frenzy, as investors used BTC as a gateway to trade speculative altcoins. By contrast, the 2021 bull run saw BTC% stabilize above 45%, reflecting a shift toward Bitcoin as a long-term store of value, fueled by institutional adoption and macroeconomic tailwindsBitcoin 2017 Vs. 2021: How This Bull Run Is Different^[1].

The 2025 cycle mirrors 2021 in key ways. Despite Ethereum's recent surge, Bitcoin dominance has remained above 60% for most of 2025, indicating a more mature market where capital is not immediately fleeing BTC. However, a critical inflection point occurred in August 2025, when BTC% dipped below 60% for the first time since early 2024, signaling a potential rotation into altcoinsBitcoin Dominance Drops Below 60% as ETH Gains Market Share^[2]. This decline coincided with Ethereum gaining 3% market share and the ETH/BTC ratio hitting 0.02549-a level not seen since mid-2023ETH/BTC Ratio Hits New High as Ethereum Dominance Skyrockets^[3].

On-Chain Metrics: Ethereum's Resurgence and Altcoin Readiness

Ethereum's on-chain activity in Q3 2025 tells a compelling story. The ETH/BTC ratio surged to 0.02549 in July 2025, a 12-month high, while Ethereum's market dominance climbed above 10%-its highest since March 2020Altcoin Surge And Institutional Shift: Inside Bybit's Q3 2025 Asset Allocation Report^[4]. This aligns with historical patterns: in Q1 2017 and Q1 2021, Ethereum's RSI averaged 72.3 and 68.9, respectively, reflecting robust buying pressureHistorical Analysis of Altcoin Performance in 2017 and 2021^[5]. In Q3 2025, Ethereum's RSI hit 79, an overbought level, suggesting strong bullish momentumEthereum's Big Q3 2025 Comeback^[6].

Meanwhile, Bitcoin's dominance has dipped below its 250-day moving average-a technical signal often preceding altcoin rotationsBitcoin Dominance 2021 Vs. 2025: Why Striking Similarities^[7]. This is further supported by the BTC+ETH dominance ratio, which fell from 60.3% in June to 55.7% in August 2025, indicating capital is diversifying into smaller altcoinsBitcoin Bleeds Market Share to Ethereum - Can BTC Retake Lead?^[8].

Capital Flow and Macro Catalysts: The 2025 Altcoin Season Is Different

The 2025 altcoin season is distinct from 2017 and 2021. While 2017 was driven by speculative ICOs and 2021 by DeFi and NFTs, 2025 is being fueled by institutional-grade infrastructure and regulatory clarity. For example, XRP and Solana have gained traction due to ETF speculation and favorable regulatory rulingsUnderstanding Altcoin Seasons: Trends, Indicators, Market Dynamics^[9]. Additionally, DeFi-native tokens and Layer 2 solutions have seen significant inflows, signaling a shift toward utility-driven capital allocationThe Data Behind Alt Seasons | Acheron Trading^[10].

Macroeconomic factors are also aligning. Global liquidity trends, including central bank rate cuts and a potential U.S. rate pause, are creating a risk-on environment. This mirrors 2021, when low interest rates and inflationary pressures drove investors toward Bitcoin and altcoins as hedgesBitcoin Dominance: Meaning, Chart, Strategy Guide 2025^[11].

What This Means for Investors

For investors, the signs are clear: an altcoin season is emerging, but it will differ from past cycles. Unlike 2017's speculative frenzy or 2021's DeFi boom, 2025's altcoin season is being driven by fundamentals. Ethereum's dominance and the ETH/BTC ratio are leading indicators, but the real opportunity lies in altcoins with strong use cases in DeFi, Layer 2 scaling, and institutional-grade infrastructure.

However, caution is warranted. Bitcoin's dominance could stabilize or rebound if macroeconomic conditions shift. Investors should monitor BTC% and the ETH/BTC ratio closely, using them as dynamic signals to adjust allocations.