The altcoin season is coming, but it’s coming soon? Institutional funds may become a new breakthrough in the rotation.

The current cryptocurrency market cycle is dominated by institutional funds, with Bitcoin ETFs becoming the primary investment tool, suppressing altcoin performance despite Bitcoin's multiple all-time highs.
Historically, post-halving rallies saw funds rotate into altcoins, but this cycle shows sustained BTC dominance due to institutional preference for regulated assets like ETFs.
Ethereum has outperformed most altcoins since April 2025, driven by ETF inflows and regulatory clarity, but altcoin breadth remains weak, with ETH's market share below historical peaks.
Bitcoin's role is evolving as a macro asset for institutions, with spot ETFs reducing volatility and speculative altcoin inflows, making it more correlated with traditional risk assets.
A potential altcoin season may hinge on catalysts like a collateralized ETH ETF approval, signaling a shift toward selective, quality-oriented altcoins.
Key indicators for altcoin rotation include ETH ETF inflows, global liquidity trends, central bank policies, and altcoin derivatives interest.
Traders should watch volatility dispersion and funding rate changes as early signs of capital moving to higher-beta altcoins.

Bybit Research

Key Highlights :

Our latest quarterly report shows a significant deviation from historical cryptocurrency market cycles: Bitcoin's continued dominance has not triggered a traditional low season despite multiple all-time highs.

In previous post-halving rallies, funds typically rotated into alternative coins as traders sought higher beta exposure. However, in the current cycle, BTC's dominance remains elevated, while altcoins have struggled to achieve significant outperformance. This shift is primarily attributed to the growing influence of institutional investors. With ETFs , corporate funds, and asset managers entering the space, Bitcoin has become the preferred vehicle for regulated exposure.

Is the altcoin season coming? If so, then the delay

 Figure 1. ETH's share of non-stablecoin cryptocurrencies before and after historical halving events (excluding 2012)

Percentage of total market capitalization. Source: Coingecko, Block Scholes

While an altcoin season has yet to materialize in this cycle, market conditions are gradually adjusting towards a more institutionalized rotation. Since April 2025, Ethereum has outperformed most altcoins, particularly in terms of staking , bolstered by an influx of ETFs and increasing regulatory clarity.

However, altcoin breadth remains weak, with ETH's market share remaining below its historical peak. The delayed rotation is attributed to structural shifts in market participation, with institutions favoring larger assets and longer holding periods. The potential approval of a collateralized ETH ETF could serve as a catalyst, signaling a shift toward a more selective, quality-oriented altcoin market.

Despite its ups and downs, Bitcoin remains unchallenged

 Figure 2. BTC dominance before and after historical halving events (excluding 2012).

Source: Coingecko, Block Scholes

Bitcoin's role in the cryptocurrency ecosystem is evolving. Its dominance remains high, reflecting its growing appeal as a macro asset for institutional investors. The launch of BTC spot ETFs has brought more stable long-term capital, reduced volatility, and curbed speculative inflows into altcoins. BTC now serves less as a cyclical trigger for altcoins and more as a liquidity anchor. Its correlation with traditional risk assets has increased, indicating that Bitcoin's price is more aligned with the global macro environment than with native cryptocurrency sentiment.

If the altcoin season hasn’t arrived yet, when can we expect it?

 Figure 3. Non-stablecoin market capitalization share of total cryptocurrency market capitalization, calculated by BTC (orange), ETH (purple), and all other cryptocurrencies (red), November 2023–February 2025. Non-stablecoin market capitalization is calculated on a logarithmic basis (white, right axis). Source: Coingecko, Block Scholes

Investors should watch several key indicators in anticipation of alternative trades and broader market rotation:

ETF inflows into ETH and any future products that support staking are a key signal of institutional sentiment.
Global liquidity indicators, central bank interest rate expectations and stock market performance provide the macro context for risk-on behavior.
In the cryptocurrency market, the continued rise in ETH dominance, the growing interest in altcoin derivatives, and the expanding breadth of mid-cap assets are key technical markers.

Traders should also monitor volatility dispersion and funding rate changes, which may precede a flight of capital to higher-beta altcoins.