Market expert Lark Davis recently asserted on social media that despite the broader cryptocurrency market facing short-term pullbacks and challenges, the highly anticipated altcoin season is far from over.

Davis believes there are significant opportunities in altcoins, especially when their total market value (excluding Bitcoin and Ethereum) hovers around $1.05 trillion.

Key factors for the upcoming altcoin season

Experts point out that the current market value of altcoins is approaching the previous high of $1.13 trillion since November 2021. He recalled a similar situation in February 2021 when the market value of altcoins tested the high from January 2018 before breaking through.

This breakthrough led to a surge from $360 billion in February 2021 to $1.13 trillion in November 2021, an increase of over 200%. Davis firmly believes that once the market value of altcoins exceeds the $1.13 trillion threshold again, we may witness one of the largest altcoin seasons in cryptocurrency history.

Several key factors make Davis optimistic about the upcoming altcoin surge:

  • Bitcoin's performance: currently at historic highs, the strong price of Bitcoin typically sparks interest in altcoins.

  • Political transition: With Donald Trump set to take office in just 34 days, market sentiment may shift towards cryptocurrencies.

  • Global interest rate cuts: Global central banks are lowering interest rates, which typically increases market liquidity.

  • Increased capital investment: A significant influx of cheap capital is flowing into the cryptocurrency space, laying the groundwork for potential growth.

  • Risk appetite environment: Current market conditions are among the strongest for risk appetite assets, creating an ideal backdrop for altcoin investments.

A rebound is expected as Bitcoin's dominance rises

Cryptocurrency analyst Miles Deutscher agrees with Davis, emphasizing that the real altcoin season has yet to begin. He pointed to compelling historical evidence indicating that alternative seasons are not mere coincidences, but rather seasonal phenomena supported by statistical patterns.

Historically, Ethereum (ETH) has shown impressive returns between January and May, often outperforming Bitcoin during this period. In these months, Ethereum's average monthly return is about 28%, while its monthly return for the rest of the year is only 3%.

Additionally, analysts assert that the current environment is particularly favorable for this rotation, as Ethereum historically outperforms Bitcoin by about 20% during alternative seasons each month.

As Bitcoin's performance strengthens, the likelihood of capital flowing into Ethereum and other altcoins is also increasing. This rotation has already been observed in the recent surge in Bitcoin's dominance, echoing patterns seen in earlier alternative seasons around 2017 and 2021.

The daily chart shows a decline in ETH's price. Source: ETHUSDT on TradingView.com

At the time of writing, the largest altcoin, ETH, is trading at $3,686, down 4.4% in 24 hours and nearly 6% over the week.