The altcoin sector is currently considered to be in a ‘buy’ zone for mid-term investors, according to popular analysts. Despite this bullish outlook, the dominance of Bitcoin (BTC) and Tether USDT did not align with this positive sentiment. In early 2025, the altcoin sector experienced a significant sell-off, with top cryptocurrencies such as Solana (SOL) and Ethereum (ETH) dropping by over 65% of their values. However, a key indicator recently flashed a ‘BUY’ signal, potentially signaling a change in the market sentiment.
CryptoQuant analyst DarkFost suggested that now might be a good time for investors to slowly enter altcoin positions with a mid-term outlook. He pointed to the aggregate altcoin trading volume positioning as a key factor in determining the buying zone. The 30-day moving average falling below the annual average indicated undervalued market conditions, similar to those seen right before the altcoin sector surged in late 2023. This raises the question of whether other altcoin momentum signals support this positive outlook.
One important factor to consider in assessing altcoin momentum is Bitcoin dominance (BTC.D) and Tether USDT dominance (USDT.D). In November of last year, USDT.D dropped during the explosive run of altcoins, indicating that traders were shifting from stablecoins to altcoins. This led to a capital rotation from BTC to altcoins, resulting in a decrease in BTC.D. However, in 2025, BTC.D has risen to 63.5%, suggesting that capital is currently parked in Bitcoin rather than altcoins. Additionally, USDT.D has also increased from 4% to 5.6%, indicating that cautious traders are moving to stablecoins to protect their capital from potential drawdowns.
Despite the current lack of enthusiasm from speculators to jump into the altcoin sector, there are signs that the market could see a positive shift in the future. The RSI heatmap and funding rates suggest that the altcoin sector is undervalued and has less leverage compared to previous periods. Funding rates below 10% across several altcoins indicate a stable market that could potentially rally higher under favorable catalysts. Some outliers, such as Onyxcoin (XCN) and Fartcoin, have seen significant gains in the past week, while others like Curve DAO (CRV) have surged nearly 50% over the past month.
In conclusion, while the altcoin sector experienced a sell-off earlier in the year, there are indications that the market may be entering a buying zone for mid-term investors. Factors such as the RSI heatmap, funding rates, and the performance of select altcoins suggest that the market is undervalued and potentially primed for a rally. It will be interesting to see how these indicators evolve in the coming weeks and whether the positive outlook for altcoins will materialize into sustained growth for the sector.
