Bitcoin dominance hits six-month low… Is 'Altcoin Season' coming next month?

Bitcoin's market dominance has recently fallen to its lowest level in six months, while the market capitalization of altcoins has surged more than 50% since last July, fueling expectations for an 'Altcoin Season.'

David Duong, Head of Institutional Research at Coinbase, stated in a report released on the 14th (local time), "The current market environment suggests the possibility of a full-fledged Altcoin Season beginning in September," adding, "Retail funds waiting on the sidelines and the dovish stance of the Fed could stimulate investor sentiment." He further noted, "This week’s US Consumer Price Index (CPI) held steady at 2.7% year-over-year, causing the probability of a September rate cut to soar to 92% based on the futures market."

The downturn in Bitcoin dominance also supports the outlook for an Altcoin Season. According to CoinMarketCap, Bitcoin's dominance has dropped from 65% in May to 59% this month. Duong assessed, "This is an early indication of capital moving into the altcoin market." According to TradingView, current BTC dominance is 59.45%, marking the lowest level since the end of January.

However, CoinMarketCap's Altcoin Season Index currently stands at 44, up from under 25 in early July, but still falls short of Coinbase's 'Altseason' threshold of 75. Blockchain Center's index is at 53, and CryptoRank's index is around 50. Duong explained, "Although altcoin market cap has surged, discrepancies among these indicators reflect growing institutional demand for Ethereum." In other words, institutions are still showing little demand for altcoins other than Ethereum.

Joanna Liang, co-founder of Jsquare, commented, "An Altseason only occurs when all three conditions are met: a dovish macro environment, declining Bitcoin dominance, and a strong or emerging theme," and added, "During the last cycle, clear themes such as ICOs, Layer 1, DeFi, and NFTs drove capital inflows." She noted, "This cycle still lacks a clear 'primary market catalyst.'"