Key Insights
- •Russell 2000 breakout draws attention back to altcoin market. Here’s why you should pay attention.
- •ETH/BTC chart breaks out of 3-month downtrend.
- •Altcoin season index extends to 4-month lows.
Altcoin season social mentions surged significantly this week, and where there is smoke, there is probably fire.
The small-cap segment of the U.S stock market might be the catalyst behind the renewed attention on Altcoins.
The Russell 2000, an index that tracks the bottom 2,000 stocks in the U.S., has just retested its historic All-Time High, suggesting that small-cap stocks might be on the verge of a breakout.
The Russell 2000’s recent bullish activity may also be flashing a green light for altcoin season.
Crypto analyst Dan Gambardello recently pointed out an interesting correlation between the Russell 2000 and altcoins in the crypto market.
This correlation exists largely because both small-cap stocks and altcoins are on the same level on the risk-reward spectrum. Therefore, investors tend to allocate similarly for both categories.
This suggests that altcoins will likely receive liquidity injection and possibly achieve a sizable rally. After all, altcoin price volatility has recently been notably higher than that of the Russell 2000.
Trend Breakout Signals Liquidity May Already Favor Altcoin Market
The idea that liquidity flows will likely start favoring altcoins may already be taking place. The market demonstrated some interesting developments between June and September.
There were periods where ETH received more liquidity flows than BTC, especially from whales and institutions. This also occurred as Bitcoin dominance declined below 60%.
Bitcoin dominance hovered at 59.28% at the time of observation. More importantly, the ETH/BTC chart achieved a mid-week bounce above a 4-month descending trend line.
This breakout means ETH is outperforming BTC or that it is relatively stronger than Bitcoin. This was evident in ETH ETF versus Bitcoin ETF flows since the start of December.
For context, Bitcoin ETFs recorded net outflows worth $142.5 million in the first 4 days, while ETH ETFs achieved positive flows at $9.8 million during the same period.
In other words, this dynamic shift confirms that the tide might be shifting in terms of altcoins, and ETH is leading that shift.
Unfortunately, demand for both Bitcoin and altcoin has remained relatively weak since the start of December.
What Will it Take for Altcoin Season to Go Full Swing?
Altcoins have a high-risk score, hence they will likely rally when conditions favor risk-on assets. This could be confirmed as early as next week during the next FOMC meeting.
Lower interest rates and an environment favoring liquidity injection could be the catalysts that altcoins need to achieve a robust breakout.
The latest data revealed that the altcoin season had not yet kicked off. The altcoin season index scored 33 points at the time of observation.
The last time that the index dropped this low was in the second week of July 2025.
It is worth noting that a pivot from the current levels would offer more confirmation of an altcoin season.
Fortunately, this will be easy to determine if ETH and other top altcoins achieve consistently high volumes in the next few weeks.
Altcoin season expectations were consistently shattered over the last few months. This was mostly because macro conditions deprived them of the liquidity necessary to sustain robust upside.
The altcoin season will likely continue to be delayed until macro conditions improve. Also, an altcoin rally often occurs after a strong Bitcoin price move.