A wave of optimism is building among market analysts who forecast a potential altcoin season commencing in January 2026. This speculation is supported by emerging data that indicates a shift in liquidity dynamics within the cryptocurrency market.
According to insights from Bull Theory, the OTHERS dominance chart—which tracks the market share of altcoins excluding Bitcoin and Ethereum—is currently positioned near a pivotal base zone reminiscent of previous explosive cycles observed in 2017 and 2020. Notably, the Moving Average Convergence Divergence (MACD) on the OTHERS dominance chart is displaying a flattening trend, while the Relative Strength Index (RSI) is positioned near historical lows. These indicators historically suggest that the current market phase is characterized by accumulation rather than excess.
Traditionally, altcoins have shown a tendency to bottom out before entering a phase of outperformance as liquidity conditions begin to improve. A historical example can be seen in late 2019 when the Federal Reserve concluded its quantitative tightening and initiated a monthly purchase of $60 billion in T-bills. This strategic move coincided with a bottoming of altcoin dominance, which subsequently trended upward through early 2022.
Over the past four years, altcoins have lagged behind Bitcoin”s recovery, primarily due to a drain in liquidity. However, analysts are now suggesting a potential turnaround, as the Fed has resumed its liquidity injections, currently at approximately $40 billion per month in T-bill purchases. The market”s forward-looking nature is also reflected in discussions around corporate tax cuts, possible $2,000 dividend-style checks, and the likelihood of a more growth-oriented Federal Reserve Chair, all of which are bolstering expectations for increased liquidity.
Additionally, small-cap equities are displaying signs of this shift, with the Russell 2000 recently achieving new highs—a move that historically precedes enhanced performance from altcoins. Despite these promising indicators, current sentiment within the market remains subdued, as evidenced by CoinMarketCap”s Altcoin Season Index, which stands at 19 out of 100, firmly situated within Bitcoin season territory and significantly below its yearly peak of 78.
On a positive note, some altcoins such as ASTE, ZEC, and MERL have experienced remarkable triple-digit gains over the past 90 days. Bull Theory posits that altcoins are likely nearing a long-term bottom relative to Bitcoin. In a base scenario, should OTHERS” dominance return to the range of 12-13%, it could spark a robust altcoin cycle. In a more optimistic liquidity-driven scenario, a rise toward 18-20% by 2026 could signify the most extensive altcoin season witnessed to date.
