- Altcoins are forming a structure similar to 2020, showing higher lows and resistance retests that often precede explosive market rallies.
- Trader sentiment is still cautious, with liquidity remaining thin, which has become synonymous with the early bullish market state when disbelief shifts back into renewed bullish sentiment.
- Bitcoin dominance has quickly retraced from overbought conditions, which often results in capital rotation historically and creates the argument for an impending alt-season.
Altcoins are showing a market structure that resembles December 2020, with growing signs of a possible liftoff phase after months of consolidation.
Market Setup Resembles Pre-2021 Rally
Merlijn The Trader compared the current altcoin market to December 2020, when disbelief dominated before a major rally. He mentioned that the total altcoin market cap chart has clearly shown a deep accumulation phase coming out of a long bear cycle. Sentiment is still low, and price action has been consolidating in a tight range. This price behavior looks like it gives a window for a potential breakout similar to early 2021.
According to Merlijn, the 2020 setup led to an +800% surge in five months as liquidity and retail participation increased. The present market shows higher lows, repeated resistance tests, and compression near critical breakout zones—all technical indicators of potential upside momentum. The resemblance to the 2019–2020 structure suggests that altcoins might be entering a new expansion cycle.
Market observers note that the red zone highlighted for October 2025 represents the “liftoff window.” During such phases, disbelief often turns into fear of missing out (FOMO), propelling valuations sharply higher.
Psychological Conditions Reflect Early Bull Market Sentiment
Traders currently exhibit caution, while overall market liquidity remains thin. This environment mirrors past stages when market sentiment was subdued before a major recovery. As Merlijn explained, the market often begins its strongest phase when investor confidence is weakest.
The cautious behavior across the sector aligns with traditional accumulation dynamics, where smart money builds positions before retail momentum returns. Low enthusiasm and limited mainstream coverage create ideal conditions for an emerging trend. This quiet market phase often ends abruptly once technical confirmation arrives.
Merlijn emphasized that such opportunities rarely announce themselves, instead appearing through subtle chart patterns. The setup, he observed, is structurally and psychologically consistent with conditions seen before the last major altcoin rally.
Bitcoin Dominance Retreat Strengthens Altcoin Case
Analyst JAVONMARKS added further context by noting that Bitcoin dominance ($BTC.D) has retraced sharply from overbought levels. Historically, such retracements have preceded strong altcoin performance. He highlighted that similar declines in dominance previously triggered notable alt-seasons.
The third retracement in Bitcoin dominance could therefore signal an upcoming rotation of capital into altcoins. With BTC.D losing momentum, investors may seek higher returns in alternative digital assets.
If this pattern repeats, total altcoin valuations could expand rapidly as market confidence rebuilds and liquidity broadens. Both analysts suggest that structural and behavioral indicators now favor a potential acceleration phase across the altcoin market.
