Bybit x Block Scholes Quarterly Report: Altcoin season coming? Bitcoin becomes the preferred vehicle for regulated exposure despite the ups and downs of altcoins

Key Highlights:

Our latest quarterly report highlights a notable deviation from historical crypto market cycles: Bitcoin’s sustained dominance — despite multiple all-time highs — hasn’t triggered a traditional altseason. 

During previous post-halving rallies, capital has typically rotated into altcoins as traders have sought higher beta exposure. However, in the current cycle, BTC dominance remains elevated, and altcoins have struggled to outperform meaningfully. This shift is largely attributed to the growing influence of institutional investors. With ETFs, corporate treasuries and asset managers entering the space, Bitcoin has become a preferred vehicle for regulated exposure. 

Is altcoin season coming? If so, it’s delayed

Figure 1. ETH’s proportion of total non-stablecoin crypto market cap before and after historical halving events (excluding 2012). Sources: CoinGecko, Block Scholes

While altcoin season hasn’t yet materialized in this cycle, conditions are gradually aligning for a more institutionally driven rotation. Ether has outperformed most altcoins since April 2025, supported by strong ETF inflows and improving regulatory clarity — particularly around staking. 

However, altcoin breadth remains weak, and ETH’s market share is still below historical altseason peaks. The delayed rotation is attributed to structural changes in market participation, with institutions favoring large-cap assets and longer holding periods. The potential approval of staking-enabled ETH ETFs could act as a catalyst, signaling a shift toward a more selective, quality-led altseason.

Bitcoin is unchallenged despite altcoins’ ups and downs

Figure 2. BTC dominance before and after historical halving events (excluding 2012). Sources: CoinGecko, Block Scholes

Bitcoin’s role in the crypto ecosystem is transforming. Its dominance remains elevated, reflecting its growing appeal as a macro asset among institutional investors. The launch of BTC Spot ETFs has introduced more stable long-term capital, reducing volatility and dampening speculative flows into altcoins. BTC now functions less as a cyclical trigger for altseason and more as a liquidity anchor. Its correlation with traditional risk assets has increased, suggesting that Bitcoin is being priced more in line with global macro conditions than with crypto-native sentiment.

If altcoin season has yet to fully arrive, when can we expect it?

Figure 3. Percentage of total non-stablecoin market capitalization of cryptocurrencies by BTC (orange), ETH (purple) and all other cryptocurrencies (red) from November 2023 to February 2025, with total non-stablecoin market capitalization on log scale (white, right-hand axis). Sources: CoinGecko, Block Scholes

Investors should take note of several leading indicators for anticipating altseason and broader market rotation: 

• ETF flows — particularly into ETH and any future staking-enabled products — are critical signals of institutional sentiment. 

• Global liquidity metrics, central bank rate expectations and equity market performance provide macro context for risk-on behavior. 

• Within crypto markets, rising ETH dominance, expanding open interest in altcoin derivatives and improving breadth across mid-cap assets are key technical markers. 

Traders should also monitor volatility dispersion and funding rate shifts, which may precede capital rotation into higher-beta altcoins.

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