Key Insights
- •A cryptocurrency analyst disputes the notion that an altcoin season cannot occur this cycle, citing token supply figures and trading volume data.
- •Despite a significant increase in the total number of cryptocurrencies, only a select group maintains substantial daily trading volume.
- •Bitcoin's dominance is showing signs of a potential shift, mirroring patterns observed in previous market cycles.
Debunking the "No Altcoin Season" Narrative
Cryptocurrency analyst Dan Gambardello has challenged the prevailing argument that an altcoin season is not feasible in the current cycle. The core of this argument is the dramatic expansion of token supply, with the number of cryptocurrencies growing from approximately 1,300 in 2017 to over 36 million today.
However, Gambardello presented data indicating that only a fraction of these tokens, estimated to be between 1,300 and 2,000, currently maintain meaningful daily trading volume.
A video shared on Gambardello's X account delves into the implications of quantitative tightening (QT) ending in December 2025.
Token Supply vs. Trading Volume
The narrative suggesting that an altcoin season is impossible often points to the vast number of tokens competing for liquidity. Social media posts highlight the growth in cryptocurrency count from 1,300 in 2017, to 100,000 in 2021, and reaching 36 million currently.
In contrast, user James Bull provided data showing that approximately 1,300 cryptocurrencies consistently maintain a daily trading volume exceeding $1 million.
This volume threshold mirrors that of the 2017 cycle. The data suggests that once the ranking of cryptocurrencies extends beyond approximately 2,000, the daily trading volume for subsequent assets drops below $200,000, rendering them less significant for capital extraction.
Gambardello emphasized that the overwhelming majority of tokens lack relevance in defining market cycles. He argues that the sheer number of tickers has never been the defining characteristic of an altcoin season.
Instead, previous cycles were determined by factors such as liquidity availability, macroeconomic conditions, and investor behavior. The concentration of trading volume has consistently remained within a similar range of 1,300 to 2,000 liquid assets across different cycles.
Impact of Quantitative Tightening's End on Liquidity
Recent data indicates a substantial amount of capital held in United States money market funds, reaching a record $7 trillion, with total assets nearing $7.52 trillion. Retail loans within these funds exceed $3 trillion.
Institutional holdings represent over $4.48 trillion, marking historical highs. Historically, significant inflows from money market funds have been observed entering various asset classes, including equities, small-cap stocks, technology stocks, and cryptocurrency markets.
Gambardello highlighted the significance of quantitative tightening ending in December 2025. Chart analysis reveals a period of approximately two and a half years of consolidation during the QT phase.
This timing suggests that the business cycle and the liquidity cycle are set to turn simultaneously, a phenomenon not observed since the previous expansionary period.
The conclusion of QT signifies a shift in the direction of liquidity, rather than an immediate impact on asset prices. Historically, altcoins have demonstrated positive responses to the transition from monetary tightening to expansion.
Analyst Wyckoff Architect noted that the rally observed from 2023 to the first quarter of 2024 occurred while quantitative tightening was still in effect, under conditions of high interest rates and a shrinking central bank balance sheet.
This analyst estimates that the next rally, when conditions align favorably, could potentially be five times stronger than the performance seen in 2023-2024.
Examining previous market cycles reveals a pattern where Bitcoin's dominance peaked around the time quantitative tightening ended, followed by a decline lasting over a year.
Purchasing Managers' Index and Altcoin Breakouts
Analysis of the Purchasing Managers' Index (PMI) reveals consistent patterns correlating with market cycles. Every significant altcoin breakout has coincided with the PMI transitioning from a contractionary phase into an expansionary one.
Current PMI data indicates a period of contraction over several years, showing signs of a bottoming formation. The indicator is currently at levels that historically preceded the expansion phase in previous cycles.
The historical correlation between the expansion of the business cycle and cryptocurrency bull markets appears evident in the available data. A move into the expansionary phase of the PMI has consistently preceded previous altcoin season rallies.
Based on the macroeconomic setup, Gambardello maintains a bullish stance, while also acknowledging the inherent uncertainties in market predictions.
Bitcoin Dominance Trends and Potential Rotation
In the previous market cycle, Bitcoin's dominance reached its peak around the time quantitative tightening concluded. Following this peak, dominance experienced a decline for over a year, a period often associated with asset distribution.
Current Bitcoin dominance levels are situated in a similar zone, with an analogous macroeconomic backdrop developing. The metric has decreased from 63% to 59% since May 2025, indicating an early divergence from previous patterns.
Periods of strong altcoin season performance have historically not occurred during sustained uptrends in Bitcoin's dominance. Instead, these seasons have typically emerged around distribution tops.
Risk models can differentiate between raw price performance and risk-adjusted positioning. Some altcoins have underperformed Bitcoin in terms of price, yet their risk metrics have shown favorable setups.
The confluence of factors including the end of quantitative tightening, the significant amount of idle capital in money markets, Bitcoin dominance at historical turning points, and the expansionary signals from the PMI collectively form a compelling setup.
Investors are advised to prepare for both optimistic and pessimistic scenarios while diligently managing their individual risk positions. Dismissing the possibility of an altcoin season based solely on the number of tokens overlooks the critical influence of liquidity cycles and broader economic conditions that have historically driven previous rallies.