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Traders are increasingly eyeing a potential altseason as multiple indicators show pressure building across the market. Bitcoin dominance is holding steady around 59%, while the altseason index hovers near 37%—a combination that suggests altcoins haven’t broken out yet but are forming the same kind of setup seen in earlier cycles before major expansions.
For nearly two years, altcoins and U.S. small-cap stocks have moved with striking similarity. The long-term correlation between Total3 and the small-cap index has stayed intact since early 2024 showing that both respond to the same risk appetite and liquidity flows. When one rises the other often follows—and that broader trend still holds today.
What’s shifting now is the short-term picture. The 30-day and 90-day correlations are slipping toward the lower end of their usual range. That means altcoins are temporarily disconnecting from small caps. These short-term breaks are normal—they come in waves rather than straight lines—but they also highlight a moment where crypto is tightening and building energy for its next decisive move.
Market structure reflects this tension clearly. Bitcoin dominance remains firm near 59%, and the altseason index is locked around 37%. When both metrics stabilize like this, it often signals the market is compressing before a larger directional shift. It wouldn’t be the first time this pattern preceded a major rotation.
In previous cycles, when short-term correlations weakened but the broader trend stayed intact, the lagging side typically caught up. Total3 has historically rebounded once liquidity settled and traders rotated back into higher-beta assets. These moments are about timing—one group cools off while the other climbs, and eventually the gap closes with a sharp move from the slower side.
Altcoin volatility has been shrinking since 2017, forming repeated compression zones that later resulted in strong upside waves. If macro conditions stay supportive and small caps maintain their breakout structure, this current setup could once again be pointing toward a more powerful altcoin phase in the next market leg.
Additional signals reinforce the idea. Earlier analyses showed that extreme market fear paired with a rejection in stablecoin dominance near a key resistance level often aligned with major crypto bottoms. Similar pressure appears to be forming now. Add in recent catalysts—such as new crypto fund approvals and the latest Ethereum upgrade—and the stage may be set for altcoins to benefit when the next expansion begins.
For now short-term correlations are breaking down liquidity is tightening and the market is compressing. Historically these conditions raise the probability of an altcoin breakout. With Bitcoin dominance steady at 59% and the altseason index stuck around 37 many traders expect a mean-reversion move next.
The coming weeks will reveal whether this pressure finally releases into the next altcoin wave. #altcoins #WriteToEarnUpgrade #altcoinseason $SOL
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