Will There Be Another Alt Season?

Key takeaways:

• Only four major alt seasons have occurred since 2016. The current cycle has seen only brief and muted altcoin outperformance.
• The rise of spot Bitcoin ETFs and institutional capital has altered capital flows. Profits no longer rotate into altcoins as they once did.
• The explosion in token supply has fragmented attention and liquidity, making broad-based rallies harder to sustain.
• Historical alt seasons coincided with strong and sustained US PMI readings. Risk appetite tends to return when the economy enters expansion mode.
• Alt season Index spikes without sustained PMI strength have failed to generate real alt seasons.

Alt season history

We define an alt season as a 90-day window in which altcoins (as a group) outperform BTC by at least 2x. Examining the chart below, we can identify four significant alt seasons since 2016 (note: we've included Ether (ETH)  as a proxy for altcoins in 2016 due to limited market-cap data, and Alts, which represents total market cap excluding BTC and ETH, for subsequent cycles). These major alt seasons occurred once in 2016, twice in 2017, and again in 2021, each time with altcoins collectively outperforming Bitcoin returns by a factor of 2.4 to more than 7 times. These periods were driven by clear, compelling narratives: for instance, the 2017 ICO boom, where Ethereum’s ease of token creation unleashed a flood of crowdfunded Initial Coin Offerings, fueling unsustainable, speculative hype. Similarly, the "DeFi Summer" of 2021 saw explosive growth driven by yield farming and decentralized finance innovations. However, the current cycle lacks a cohesive narrative. While one could argue there was a "meme coin mania", especially prominent with hyperactive speculation on Solana-based meme tokens, this speculation failed to lift the broader altcoin market, unlike previous alt seasons.

 While attributing an entire alt season to a single narrative might be overly simplistic, the underlying logic was always straightforward: Bitcoin would surge, delivering substantial returns, and those profits would subsequently rotate further out along the crypto risk curve into altcoins, creating a rising tide that lifted all boats. For instance, in late 2017, Bitcoin's quarter-over-quarter returns peaked at over 4.2x in December, after which altcoins continued surging, eventually surpassing Bitcoin’s returns to hit 9.6x just one month later. Similarly, in 2021, altcoins sustained their outperformance against Bitcoin for a full 90 days after Bitcoin's growth had already peaked. This current cycle stands in stark contrast. Bitcoin has consistently outperformed altcoins, as clearly reflected in its market dominance. At its lowest point in 2022, Bitcoin represented just 39% of the total crypto market cap; today, it commands 65%. Bitcoin isn't merely growing; it’s devouring the entire crypto pie.

It’s worth paying close attention to the Alt Season Index , which tracks how many of the top 100 cryptocurrencies by market cap outperform Bitcoin over a rolling 90-day period. This is an oscillating indicator, ranging from 0 to 100, that many investors use to time and size their altcoin positioning. A reading below 25 suggests that 75% of altcoins have underperformed BTC, potentially signaling relative undervaluation. Conversely, a reading above 75 means three-quarters of alts are outperforming Bitcoin, often seen as a signal to take profits. For clarity going forward, we’ll refer to this 0–100 metric as the Alt Season Index, and reserve the term Alt Season for full-fledged market phases where altcoins, as a group, deliver 2x or more in relative returns compared to Bitcoin.

According to this indicator, we've experienced brief alt seasons during the current cycle, notably in January 2024 and again in December 2024, coinciding with the Solana meme-coin mania. However, this indicator has limitations. While it successfully identifies periods when most altcoins outperform Bitcoin, it doesn't capture the magnitude of that outperformance. For instance, if most altcoins outperform Bitcoin by a negligible margin, say 0.1%, the index still registers an alt season, even if its intensity pales compared with the iconic alt seasons of 2017 or 2021 when altcoins dramatically exceeded Bitcoin’s returns. 

Why we haven’t had a true Alt Season

The present cycle, however, is fundamentally different from those of 2017 and 2021. The market is maturing, and with that maturity comes structural shifts in how capital moves. On 11 January 2024, the first spot Bitcoin ETF (exchange-traded fund) launched in the US. ETFs today collectively manage over $137 billion in assets and hold more than 1.2 million BTC, about 6% of Bitcoin’s circulating supply and likely more when lost coins are accounted for. In June alone, Bitcoin ETFs saw $3.3 billion in average daily trading volume, about 7% of total BTC spot volume, which averaged $48 billion per day. This matters because institutional investors, who now hold meaningful positions via ETFs, typically take a long-term, portfolio allocation approach. Crucially, ETF investors can’t move directly into altcoins. When they take profits, the money usually flows back into traditional assets, not into the latest Solana-based meme coin. Since there’s no simple way to rotate from a Bitcoin ETF into alts, that capital leaves the crypto ecosystem instead of moving deeper into it.

Furthermore, the number of tokens in the market has exploded in recent years, saturating the landscape and diluting investor attention. Using CoinMarketCap as a proxy, the number of listed tokens grew from just 572 in early 2016 to 2,403 by 2023, and then surpassed 10,000 in 2024. That figure only includes tokens meeting basic listing criteria.  It excludes the hundreds of thousands of tokens created daily that never make it to public aggregators. This token glut has fragmented both capital and attention. With so many assets fighting for visibility and liquidity, it’s increasingly difficult for investors to identify high-conviction opportunities. Meanwhile, the Alts market cap (excluding BTC and ETH) sits at around $846 billion, still below its 2021 all-time high. The number of tokens in circulation keeps growing while the entire Alts market cap is flat. In other words, the pie isn’t growing, the slices are just getting thinner.

The fundamentals of the crypto market have undeniably changed, but what about the bigger picture? If altcoins are risk-on assets, can we look to macro conditions to explain their muted performance, or predict when they might shine again?

A macro framework for Alt Season

If the market’s internal structure has evolved, and altcoin narratives have splintered, where else can we look for clues about what drives alt season? One compelling lens comes from traditional finance. Altcoins today closely resemble US small-cap stocks: early-stage, fast-growing, and highly sensitive to changes in investor sentiment. As a rule of thumb, small caps are defined as companies with a market capitalization under $2 billion. That threshold covers over 99% of the crypto market. As of today, only around 40 tokens have a circulating market cap above $2 billion, and four of those are stablecoins. More importantly, small caps in equity markets are often characterized as young companies with high growth potential, a fitting description for most serious crypto projects.

In TradFi, small-cap stocks are known to be highly cyclical. Investors treat them as risk-on assets: they tend to outperform when economic conditions are improving and optimism returns but underperform during downturns as capital retreats to the safety of large caps. To track these economic cycles, one of the most widely used tools is the US Purchasing Managers’ Index (PMI), a forward-looking indicator that tends to move ahead of broader economic trends. A rising PMI (especially above 50) signals expansion: new orders are increasing, production is ramping up, companies are hiring, inventories are being rebuilt, and supply chains are moving faster. This often kicks off a virtuous cycle: more production → more income → more spending → more liquidity. Conditions that typically revive risk appetite.

 So, what were PMI conditions during previous alt seasons? And could tracking PMI trends help us anticipate when the next true alt season might emerge?

Green background: PMI > 50

All major Alt Seasons occurred when the US PMI was above 50, signaling an expanding economy. With the exception of the 2016 alt season, every major run in altcoins followed a stretch of consistently strong PMI readings, either above 55 or remaining over 50 for at least nine consecutive months, effectively confirming that macro conditions were supportive. This reinforces the idea that a rising or elevated PMI often coincides with stronger altcoin performance. That said, a PMI above 50 doesn’t guarantee altcoin outperformance. There have been plenty of periods where alts underperformed Bitcoin despite healthy macro indicators. The takeaway isn’t that high PMI causes alt seasons, but rather that the biggest alt season returns tend to happen when the economy is already in expansion mode. This makes intuitive sense: as business conditions improve, disposable income and liquidity increase, creating an environment that’s naturally more supportive of risk assets like altcoins.

Nonetheless, a sustained macroeconomic backdrop is critical for supporting risk assets like altcoins. Since 2016, there have been three notable instances where the US PMI briefly rose above 50, only to slip back below within a couple of months, suggesting that purchasing managers initially expected improving conditions, only to quickly reverse course:

• 2019: The Alt Season Index peaked one month before PMI crossed above 50.
• March 2024: The index peaked at the end of January, again about a month ahead of the PMI uptick.
• January 2025: A similar pattern, alt season index topped out roughly a month before PMI retreated.

What’s striking is the apparent sensitivity of the Alt Season Index to PMI trends, as if crypto markets are anticipating economic turning points before they’re confirmed in traditional data. This reinforces the role that macro sentiment, and forward-looking indicators like PMI, play in shaping altcoin cycles.

But here's the key point: in none of these cases did a peak in the Alt season Index translate into a full-fledged Alt Season. Without sustained economic momentum behind it, altcoin outperformance stalled before it could compound into the kind of broad-based, explosive rallies seen in 2017 or 2021.

Conclusion

With the lack of a sustained Alt Season this cycle, many traders are left wondering: will it ever come back? The evidence suggests that the market structure has fundamentally shifted. Institutional capital, now funneled through vehicles like Bitcoin ETFs, tends to rotate profits into traditional assets, not alts. At the same time, the explosion in the number of tokens has saturated the market, making it harder for any single project to capture attention or attract deep liquidity. And yet, there's still reason for optimism. We’ve yet to see the kind of supportive macro backdrop that historically fuelled past alt seasons. Over the last three years, US PMI readings have largely stayed below 50, a clear signal of economic contraction and weak risk appetite.

Should we see a sustained move in PMI above 50, that could mark a turning point. That’s when the Alt Season Index becomes especially valuable, not just as a lagging measure of outperformance, but as a timing tool to identify when the macro environment and market sentiment are finally aligned. In that window, selecting the right narrative and rotating into high-conviction tokens can dramatically improve the odds. On the flip side, if the Alt Season Index spikes while PMI remains weak, history suggests caution is warranted. That combination has not led to meaningful, durable returns. In those moments, it may be wise to take some risk off the table rather than chase short-lived rallies.