Glassnode’s Altcoin Cycle Signal has returned to ‘Altcoin Season’ territory. Yet the firm warns that Bitcoin’s (BTC) sharp decline is driving most of the move.

In a typical market cycle, the print signals that alternative cryptocurrencies are rising while Bitcoin remains strong and continues attracting buyers without dominating all market liquidity.

Bitcoin Weakness Powers the Altcoin Signal

The Altcoin Cycle Signal moves above 50 when altcoins outperform Bitcoin. It now sits at 86, deep inside Altcoin Season. 

Glassnode said altcoins are running out of sellers after nearly two years of pressure. Bitcoin, however, is trending down. 

“For now, the BTC side is still doing most of the work,” Glassnode said.

Data from BeInCrypto Markets showed that Bitcoin has declined 18% over the past month. The pullback comes as risk assets face pressure from a more hawkish Federal Reserve stance and growing concerns that interest rates could move higher.

Analysts at Bank of America expect the Fed to deliver three rate hikes this year.

Higher interest rates are typically viewed as bearish for risk assets because they increase borrowing costs, tighten financial conditions, and reduce investor appetite for speculative investments such as cryptocurrencies.

Not everyone shares that outlook, however. In a recent research note, Grayscale Head of Research Zach Pandl said the firm’s base-case scenario is for the Fed to refrain from further rate hikes.

Under that scenario, easing concerns about monetary tightening could support Bitcoin and other digital assets, particularly if broader financial markets continue to perform well.

“Bitcoin and gold have underperformed stocks since the start of the Iran war due, in part, to expectations for tighter Fed monetary policy. But if rate hikes become less likely—in line with our base case scenario—Bitcoin could potentially catch up to stocks,” the blog read.

That distinction matters because Glassnode noted that the current Altcoin Season reading is being driven primarily by Bitcoin’s decline.

A recovery in BTC could help validate the signal by allowing altcoins to outperform alongside a stronger Bitcoin rather than in its absence.

Still, a high signal reading does not guarantee a market-wide surge. Experts, including Bitwise Chief Investment Officer Matt Hougan, said the era of traditional altcoin rallies is over.

“I don’t think we’ll see the sort of rising tide lifts all buckets…I think we’ll see a non-traditional altcoin season,” he said.

CryptoQuant CEO Ki Young Ju went further. He argued that “narrative alone is no longer enough,” for altcoins. He projects that altcoins with real revenue and business models will survive.

Source: BeInCrypto