Recent market action continues to support the altcoin rally thesis.
Zooming out, Bitcoin (BTC) is still outperforming most other large-cap assets, up over 6% in the second quarter so far. On the other hand, most large caps remain in the red for the quarter, which corresponds to Bitcoin dominance stable around the 60% level, alongside a gain of 1.85% over the same period.
That said, the OTHERS/BTC ratio does not really give the same picture. As the chart below shows, the ratio has increased by more than 6% in the second quarter so far. Most notably, it closed May with a strong 14.5% gain, suggesting that some capital rotation beyond Bitcoin may already be underway.
Yet this strength does not show up in the Altcoin Season Index.
According to data from BlockchainCenter, the index finished May down more than 10%, suggesting that the broader altcoin market is still struggling to gain traction against Bitcoin. In other words, even though pockets of the market appear to be shifting toward altcoins, participation remains narrow rather than broad.
This is also reflected in the dominance of Bitcoin, which continues to hover around the 60% level. In this context, the rise in the OTHERS/BTC ratio appears to highlight a more selective rotation towards altcoins rather than the start of a full-fledged alt season.
Yet this strength has not filtered through to the Altcoin Season Index, raising the question: what exactly is this divergence signal?
Ethereum weakness continues to challenge the altcoin narrative
The market is increasingly viewing June as a potential catalyst for a broader altcoin rally.
The reasoning is simple. As noted by a leading analyst, Hyperliquid (HYPE) continues to show an upward trend, but this strength has not translated into a broader rotation in the altcoin market. Instead, capital remains concentrated in a handful of overperforming countries.
However, this could start to change in June. As regulatory clarity is expected to improve, traders are betting on capital rotating further away from the risk curve. Much of the focus remains on Ethereum (ETH), which is still trading nearly 60% below its previous cycle high.
Until ETH and its DeFi ecosystem attract larger flows, the broader altcoin rally may struggle to gain traction.
On-chain data reinforces this view.
According to DeFiLlama, Ethereum’s TVL has fallen back towards the $40 billion level, an area last seen in the first quarter of 2024. Meanwhile, the supply of stablecoins on the network remains around $6 billion below its peak of $166 billion. Together, these metrics suggest that capital has not yet returned to Ethereum on the scale necessary to support a broader rotation in the altcoin market.
This also helps explain why the Altcoin Seasonal Index remains subdued.
While the OTHERS/BTC ratio continues to rise, indicating selective inflows into certain altcoins, the market as a whole is not seeing the same level of participation. Simply put, capital is concentrated on a few outperformers rather than being dispersed across the altcoin sector, which helps explain the growing divergence between the two indicators.
