Key signals of a market shift toward altcoins

The beginning of alt season is signaled by various market indicators, with the top five discussed in this article:

1. Bitcoin accumulation

Bitcoin (BTC) is the leading cryptocurrency in the market and is the first asset investors buy, which drives up its price and dominance level.

When Bitcoin's price is low, investors see it as an opportunity for long-term capital growth. Crypto whales start accumulating Bitcoin, and the amount of Bitcoin being sold decreases. During this phase, altcoins typically grow more slowly than Bitcoin.

For example, between 2021 and 2022, after a prolonged "crypto winter," Bitcoin's price dropped more than fourfold — from $69,000 to $16,000. However, after hitting a local low, Bitcoin resumed its growth, and by the end of 2023, it had nearly tripled in value to $46,000. Meanwhile, the leading altcoin, Ethereum (ETH), rose only 2.3 times — from $1,000 to $2,300 during the same period.

Eventually, Bitcoin's growth slows and enters a consolidation phase, during which its price moves sideways, characterized by a flat trend. This means that, for a period, investors can't derive significant profits from Bitcoin.

At that point, investors shift their focus to altcoins, which haven't risen much yet, reallocating their capital to other cryptocurrencies. In other words, they start looking for higher-yield, less capitalized assets — potentially signaling the onset of all season.

2. Decline in Bitcoin Dominance

Bitcoin Dominance is one of the key metrics that crypto investors use to identify the start of a new season.

During Bitcoin's consolidation and the price increase of alternative cryptocurrencies, Bitcoin dominance begins to decline while altcoin dominance rises. As a result, the total market capitalization of the crypto market increases.

For instance, from early 2020 to May 2021, altcoin dominance more than doubled — from 7.3% to 19%. Meanwhile, Bitcoin dominance fell by more than 1.5 times — from 68% to 41%.

During this period, Bitcoin's price increased approximately sevenfold — from $8,800 to $53,000 — while Ethereum's price grew about 35 times — from $130 to $4,600. Thus, the leading altcoin's growth rate was five times higher than that of Bitcoin.

3. Increase in altcoin trading volume

Typically, as altcoin dominance grows, so do their prices and trading volumes. This can serve as a signal of an approaching alt season.

For example, in early 2020, Ethereum's trading volume was $7.4 billion. By April 2021, when ETH reached a new all-time high (ATH), its volume surged to $42.4 billion — a 5.7x increase.

Additional indicators of a looming altseason include more frequent exchange listings. As altcoins rise, projects are more likely to launch their tokens to capitalize on increased liquidity.

4. Growth in DeFi and NFT activity

Innovations greatly influence the crypto market. The altseason from 2020 to 2021 coincided with the DeFi boom — an explosion of decentralized finance protocols, including:

• decentralized exchanges (DEXs): Uniswap, Balancer, SushiSwap, PancakeSwap;
• lending platforms: Aave, JustLend, Compound;
• yield farming protocols: Pendle, Convex Finance.

During this period, the DeFi sector experienced explosive growth, resulting in a surge in liquidity and altcoin prices. According to DeFi Llama, the total value locked (TVL) in DeFi grew 165x — from $603 million in January 2020 to $100 billion in May 2021.

At the same time, the NFT market captured the attention of investors. Collections like CryptoPunks, Bored Ape Yacht Club (BAYC), and Pudgy Penguins experienced a surge in popularity. At the crypto market's peak, some NFT tokens sold for over $10 million at auction.

In the current cycle, new DeFi protocols have emerged after a long correction, including:

• liquid staking protocols: Lido, Symbiotic, Rocket Pool;
• restaking protocols: EigenLayer, Babylon Protocol;
• real-world asset (RWA) protocols: BlackRock BUILD.

As of May 2025, some of these new protocols rank in the top 10 by TVL. For example, Lido's liquid staking TVL is $23.6 billion, just behind lending platform Aave. This new wave of innovation may precede the next altcoin boom.

5. Crypto narratives

Altcoin growth often gives rise to new market trends. In 2020, DeFi tokens (UNI, AAVE, 1INCH, CAKE) defined the trend, while in 2023, it was meme coins. The popularity of meme coins in 2023–2024 fueled growth in DeFi ecosystems like Toncoin, Solana, and BNB Chain.

Other emerging trends and narratives in recent years include:

• artificial Intelligence (AI),
• liquid staking and restaking (LST tokens),
• real-world assets (RWA),
• decentralized physical infrastructure networks (DePIN),
• layer-2 (L2) scaling solutions for blockchains.

As these narratives gain traction, tokens associated with them exhibit rapid growth, accompanied by an increase in the number of tokens launched. This trend can be tracked on platforms like CoinMarketCap or CoinGecko.