Key Indicators for Altcoin Season
Altcoin Dominance (TOTAL2/TOTAL) has reached a multi-year low, coinciding precisely with the conclusion of the Federal Reserve's quantitative tightening (QT) program. This marks the first instance since 2022 that the macro liquidity conditions are shifting from restrictive to accommodative, with the balance sheet runoff officially ending.
According to respected chartist @polaris_xbt, this development provides a crucial macro green light for altcoins. In an update on December 2, 2025, polaris_xbt highlighted that Altcoin Dominance has formed a clear double-bottom pattern, signaling a potential reversal.
Historical Patterns and Forecasts
Polaris_xbt's thesis posits that altcoins historically tend to surge in anticipation of significant monetary policy shifts. With quantitative tightening now concluded and interest rate cuts largely priced into the market, the path of least resistance is expected to be a strong upward movement in altcoin prices. This rally is anticipated to continue until a new Federal Reserve Chair is appointed, which is projected for the first or second quarter of 2026.
The forecast suggests that once the new Fed Chair announcement is made, institutional investors may engage in a "sell the news" event, leading to a rotation back into Bitcoin (BTC) and fiat currencies. This shift would likely result in a decline in altcoin dominance.
Altcoin Dominance
— polaris_xbt (@polaris_xbt) December 2, 2025
Now that QT is finally ending we should see some strength in this chart.
We could see a run up before the new FED chair is appointed…. and then sell the news once it finally happens pic.twitter.com/yTFfS3QStP
Supporting Data and Market Signals
The historical data supports Polaris's outlook. Major altcoin seasons, such as those in 2017, 2021, and early 2025, have all commenced within weeks of quantitative tightening ending or being paused. Currently, altcoin dominance is at levels not seen since the 2019 cycle, while Bitcoin dominance remains near 60%. These conditions have historically preceded substantial altcoin surges of 300-500%.
On-chain indicators are also flashing similar signals of impending altcoin strength. The Ethereum/Bitcoin (ETH/BTC) ratio is consolidating below the 0.04 mark, stablecoin liquidity is increasing on Layer-2 networks, and retail interest in "altcoins," as measured by Google searches, has reached its highest point since May 2025.
Trader Positioning and Cautionary Advice
Experienced traders are reportedly adjusting their portfolios in anticipation of this potential altcoin rally. Funding rates on altcoin perpetual futures contracts have turned negative, indicating that short-sellers are paying longs, a common sign of bullish sentiment. Open interest is also reportedly surging across various altcoin ecosystems, including Solana, Avalanche, and Layer-2 solutions.
Polaris_xbt offers a stark warning to market participants: "Enjoy the ride up, but mark your calendar the day the new Fed Chair is announced." This emphasizes the temporary nature of the anticipated altcoin surge and the importance of being aware of the upcoming macro event that could trigger a reversal.