Original author: Marie Poteriaieva
Compiled by: Alvis, Mars Finance
Bitcoin's recent breakthrough of the 100,000 USD mark is undoubtedly a historic milestone. However, as this leading cryptocurrency celebrates its achievements, many altcoins have begun to outperform Bitcoin, signaling the arrival of altcoin season.
Since the beginning of the year, 20 of the top 50 crypto assets by market capitalization have seen increases exceeding Bitcoin's impressive 124% rise. The rise in altcoin market capitalization, increased media attention, and the surge of the altcoin season index further confirm this trend. Additionally, a recent report from CCData shows that trading volume in November reached an annual high, and open interest also hit a historical record. These signs indicate that the market's risk appetite is rising. This change typically favors altcoins due to their higher potential return.
On a deeper level, investing in altcoins is essentially investing in Web3 and other blockchain-related industries. This sector heavily relies on regulatory clarity, and after the U.S. elections, the market has become more optimistic about this. Additionally, according to the latest data from CryptoQuant, altcoin trading volume is not driven by BTC trading pairs. This means that the market is experiencing genuine growth, rather than just a rotation of assets from Bitcoin to altcoins. It may also suggest that this altcoin season will not wait for Bitcoin price consolidation but could see both types of crypto assets rising simultaneously.
The altcoin rebound since November seems to suggest that 2025 will usher in a larger-scale altcoin season. Emerging crypto trends and technologies may attract the attention of institutional investors and venture capital. Below are speculations about the potential and key narratives for the next round of altcoin season based on on-chain data and other trends.
1. Altcoin Season is not just about price
Altcoin season is typically defined as a phase where altcoins consistently outperform Bitcoin. This phase often occurs in the last year of Bitcoin's four-year cycle when market enthusiasm spreads from Bitcoin to other currencies, and large-cap altcoins approach or exceed their historical highs, while new narratives drive small and mid-cap coins to break unknown highs. Ultimately, this phase peaks due to widespread FOMO (fear of missing out), pushing the entire crypto market into an overheated state. This overheating typically signals an impending market correction, eventually leading into a bear market cycle.
However, altcoin season is not solely related to price; it represents a comprehensive evolution of market activity, application adoption, and innovation. To date, each round of altcoin season has reflected unique technological changes and market trends.
The first round of altcoin season in 2017 was marked by the ICO boom and the rise of NFTs (remember CryptoKitties?). The second round of altcoin season in 2021 combined the rise of DeFi with the full-blown NFT and gaming craze. To support these developments, cheaper and more scalable Layer 2 solutions also emerged. All these innovations have withstood the test of the crypto winter and continue to develop to this day.
Looking ahead, the third round of altcoin season in 2025 is expected to bring new narratives and technologies, some of which are already in development, while others have yet to emerge.
2. Indicators of Altcoin Season
Multiple indicators suggest that altcoin season is approaching. Bitcoin's dominance is declining, altcoins are outperforming Bitcoin, and their market capitalization has reached new highs. However, the Altcoin Season Index and other related indicators show that the peak for altcoins may not have arrived yet.
In absolute terms, the total market capitalization of altcoins, calculated by subtracting Bitcoin's market value from the total market capitalization of the crypto market, has reached a historical high. According to Coingecko data, the current market capitalization is 1.89 trillion USD, surpassing the peak of 1.79 trillion USD set in November 2021. In relative terms, since November, Bitcoin's dominance has fallen from 60% to 51%.
However, both indicators include stablecoins and wrapped assets. While they are crucial for market liquidity, they may not accurately reflect the development of the altcoin market. Additionally, under bull market conditions, such assets tend to favor altcoins due to their higher risk-return characteristics.
To measure the market more purely, Blockchain Center's Altcoin Season Index excludes stablecoins and wrapped assets. This index defines altcoin season as a period where over 75% of the top 50 altcoins outperform Bitcoin in the past 90 days. Recently, this index broke the 75% threshold on December 2 and maintained it for a week. In the previous altcoin season, the index had stayed above the threshold for nearly three months. This supports the view that the peak of altcoin season may occur in 2025.
The OTHERS index, calculated by platforms like TradingView, is another important indicator for measuring altcoin performance. This index tracks the total market capitalization of the crypto market after excluding the top ten currencies (including the two largest stablecoins). Although this index has risen by 123% in the past 30 days (followed by a pullback), it has yet to reach the previous historical peak. The last time it surged from the historical high in 2017, it increased by 525%, indicating considerable room for growth.
Finally, Google Trends also reflects people's interest in altcoins. With a peak in May 2021 (index at 100), current search interest has risen to 87, the highest level since then.
3. Key Narratives for Altcoins in 2025
As of 2024, among the top 50 altcoins performing best, three are Memecoins: Dogwifhat (WIF +2,027%), PEPE (+1,764%), and Dogecoin (DOGE +382%). Although Memecoins are often emblematic of altcoin season, they are unlikely to define the mainstream narrative of the crypto market in 2025.
According to Blockchain Center data, among the new technologies emerging in 2023-2024, BRC-20Token has performed the best. While some do not consider it a true altcoin, tokens issued on the Bitcoin blockchain using technologies like Ordinals or Runes have seen increases exceeding 1000% this year. In more traditional altcoin categories, RWAs (Tokenization of Real World Assets) lead with a 717% annual growth rate, including tokenized versions of real-world assets and their supporting protocols. Following closely are AI-related tokens (+513%) and DePIN (Decentralized Physical Infrastructure, +303%).
By 2025, new narratives are likely to emerge, and the trends in venture capital may reveal the most promising directions. According to Pitchbook data, venture capital in the crypto space performed relatively modestly in 2023 (10 billion USD), accumulating 7.1 billion USD in the third quarter of 2024. Next year, its activity may rebound to the levels of 2021 and 2022, reaching 25.3 billion USD and 29.4 billion USD, respectively. This influx of funds will flow into specific projects and broader sectors, driving the next wave of growth.
Finally, please note that during the frenzy of altcoin season, it is essential to avoid being swept up by market hype. Each bull market eventually ends with a correction (turning bearish), and only those tokens with strong fundamentals and real-world applications can survive into the next cycle.
