The rally in Dogecoin (DOGE), PEPE, and SHIB could be an early signal of the upcoming altcoin season

Bitcoin (BTC), the largest and oldest cryptocurrency, has led the digital asset rally of late, but there are early signs of an impending so-called “altcoin season” in which smaller tokens outperform, analysts say.

BTC is already near its 2021 all-time high, hitting $64,000 this week, accompanied by strong inflows into spot Bitcoin ETFs. It is up 48% year-to-date, while the broad-based CoinDesk 20 Index (CD20) is up 33% over the same period, highlighting the underperformance of the altcoin sector.

However, this could soon change, analysts at K33 Research said in a market report on Friday.

“Judging by history, altcoins will start to outperform around the time we are now,” K33 wrote. The report found that since the market bottom in November 2022, Bitcoin's market capitalization has doubled compared to the total value of all cryptocurrencies except BTC and Ether (ETH). The situation is similar to the end of 2020, analysts say, before altcoins began to keep pace with BTC's performance.

This week's “tremendous” meme coin rally could be a “possible early sign” of the upcoming altcoin season, they added.

Popular dog-themed tokens Dogecoin (DOGE) and Shiba Inu (SHIB) posted gains of 40-50% this week, while newer market entrants such as Pepe Coin (PEPE), Bonk (BONK) and Dogwifhat (WIF) have seen gains throughout the week doubled their price or recorded more in the same period.

However, the report noted that timing the altcoin season is a “risky sport” as Bitcoin ETFs have changed the crypto investment landscape and there is no guarantee that the money flowing into Bitcoin will ultimately end up in smaller assets will leak. “Risk appetite is enough to send a few select altcoins to great heights, but we have not yet seen a new wave of retail traders entering the altcoin space and creating the rising tide that lifts all boats.” said K33.

Analysts at Swissblock said in a market update on Friday that “signs point to an impending alt season.”

According to a chart shared on Telegram, the median return of altcoins versus Bitcoin appears to be reaching a bottom and could change soon, which would lead to an increase in altcoin prices relative to BTC.

The key signal to look for to confirm the start of a period of altcoin outperformance is ETH breaking the $3,500 price threshold, Swissblock said.

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