Altcoin prices rise as USDT dominance falls: Is ‘altseason’ here?

Key takeaways:

TOTAL3 market cap hit a record $1.18 trillion, signaling accelerating momentum within the altcoin cohort of the crypto market.
USDT dominance dropped sharply, hinting at capital rotation into risk assets.

TradingView ticker, TOTAL3, which tracks the market capitalization of all cryptocurrencies excluding Bitcoin (BTC) and Ether (ETH), reached a new all-time high of $1.18 trillion on Monday. The metric also marked its highest weekly close on Sunday, surpassing its peak market capitalization from 2021.

Investments, Markets, Cryptocurrency Exchange, Binance, Price Analysis, Market Analysis, Altcoin Watch

TOTAL3 market cap. Source: Cointelegraph/TradingView

Traders use the TOTAL3 chart as an indicator of altcoin market health because its combined valuation provides insight into capital rotation patterns and the strength of the broader altcoin ecosystem.

Adding fuel to the altseason speculation, USDT dominance has plummeted by 11.8% over the past week, dropping to 4.18% from 4.74%. This sharp decline in Tether’s market share typically signaled that investors are rotating capital away from stablecoins and into riskier assets, seeking higher returns as market confidence builds. A drop below 4% would match its lowest USDT dominance since January 2025.

USDT dominance weekly chart. Source: Cointelegraph/TradingView

Crypto trader Honey also expressed bullish sentiment and identified a breakout from a cup-and-handle pattern on the weekly chart. Honey said,

“We have officially broken out of the cup and candle, which is extremely bullish for our beloved altcoins. expect fireworks in the coming weeks. TOTAL3 to $1.6T.”

TOTAL3 weekly analysis by Honey. Source: X

Data points to a slowly brewing “Altseason”

A deeper look at performance data among the top 100 crypto assets highlighted the growing strength and the complexity of this emerging altcoin cycle.

The data revealed a decisive acceleration in altcoin momentum over the past three months, with cumulative returns outpacing Bitcoin’s by more than sixfold. This shift suggested that while Bitcoin continues to anchor the market, capital is increasingly rotating into riskier assets, which is an indicator of an “altseason” in formation.

Top 100 excluding BTC average returns data. Source: Cryptobubbles/Cointelegraph

However, not all indicators are fully aligned yet. Average returns for the top 100 crypto assets show that only 60% of gains currently stemmed from altcoins, below the 80% to 90% threshold that typically defines an established altseason.

At the same time, the altcoin season index has climbed to 69%, closing in on the critical 75% line that would confirm widespread altcoin dominance.

Adding a layer of caution, CryptoQuant reported that since Sept. 22, exchanges have seen a $4 billion net outflow in ERC-20 stablecoins, with Binance driving $3 billion (75%) of the total. Its combined stablecoin reserves have fallen to $42 billion from $45 billion.

Binance Stablecoin reserves data. Source: CryptoQuant

Large-scale withdrawals often follow market gains, suggesting investors are taking profits and moving capital off exchanges. Lower stablecoin balances reduce the “dry powder,” limiting buying power and increasing the market’s vulnerability to short-term price dips.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.