The cryptocurrency market is showing signs of a major shift as altcoins begin to regain momentum. The TOTAL3 index, which measures the combined market capitalization of all altcoins excluding Bitcoin and Ethereum, has recently undergone a structural transformation—from bearish to bullish. This development, highlighted by prominent crypto analyst Trader Tardigrade, suggests that the long-anticipated alt season may be on the horizon.
As traders and investors closely monitor market indicators, this potential trend reversal could signal the start of a new growth phase for alternative cryptocurrencies. With key technical patterns forming and historical parallels emerging, now is the time to understand what’s driving this shift—and whether it’s backed by sustainable momentum.
Bullish Breakout in TOTAL3: A Sign of Alt Season?
Technical analysis of the TOTAL3 chart reveals a significant structural evolution. According to Trader Tardigrade, the market has transitioned from a confirmed bearish pattern into a developing bullish formation. This change marks a pivotal moment for altcoin investors who have been waiting for renewed market strength.
Earlier in the cycle, the altcoin market completed a textbook Double Top pattern—a classic bearish reversal signal. This pattern was defined by two distinct price peaks at nearly identical levels, both failing to push higher. After the second peak failed, prices broke down sharply, confirming the bearish outlook.
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The breakdown reached its projected downside target, validating the pattern and marking the end of that phase. Once the sell-off concluded, the market entered a period of consolidation—laying the groundwork for what may now be a powerful reversal setup.
Currently, the price action is forming what appears to be an Inverse Head and Shoulders (IHS) pattern, one of the most reliable bullish reversal formations in technical analysis. The neckline of this pattern sits around the $920 billion mark—a critical resistance level that must be decisively breached for confirmation.
A breakout above this level would confirm the IHS structure and likely trigger strong buying pressure across the altcoin ecosystem. Based on measured move projections, Trader Tardigrade estimates a potential upside target near $1.29 trillion—representing substantial upside from current levels.
At present, the market is shaping what looks like the right shoulder of the pattern. While confirmation is still pending, the mere emergence of this formation following a prolonged bearish phase is a noteworthy development. Should volume and momentum support a clean breakout, it could serve as the catalyst for a broad-based altcoin rally.
Historical Pattern Suggests Alt Season Could Begin Soon
In a follow-up analysis, Trader Tardigrade compared current market behavior with that of late 2023 to early 2024 using the TOTAL2 index, which tracks the total market cap of all altcoins.
The side-by-side chart comparison reveals striking similarities between these two periods:
- Both show an initial strong upward move.
- Followed by a consolidation phase within a descending channel.
- Then, ultimately, a breakout leading to accelerated gains.
In early 2024, after consolidating inside the descending channel, altcoins experienced a powerful breakout that sparked a major rally—commonly referred to as "alt season." Now, in mid-2025, the market appears to be retracing a nearly identical path.
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Currently, the TOTAL2 index is undergoing a pullback within a similar descending channel pattern. If history repeats itself, a breakout from this range could ignite another wave of investor interest in altcoins—especially those with strong fundamentals and growing adoption.
This kind of cyclical behavior isn’t uncommon in crypto markets, where sentiment, liquidity, and macro conditions often align to create recurring patterns. Recognizing these setups early gives informed traders a strategic edge.
What Triggers an Alt Season?
An alt season refers to a period when alternative cryptocurrencies outperform Bitcoin in terms of price appreciation and trading volume. While BTC often leads the initial phase of a bull market, capital eventually rotates into altcoins—driving double- or even triple-digit percentage gains across hundreds of projects.
Several factors typically contribute to an alt season:
- Bitcoin dominance decline: When BTC’s share of the total crypto market cap begins to fall, it indicates capital rotation into altcoins.
- Increased DeFi and ecosystem activity: Growth in decentralized finance, NFTs, layer-1 platforms, and new token launches fuels investor interest.
- Positive macro environment: Lower interest rates, improved risk appetite, and institutional inflows support speculative assets like altcoins.
- Technical breakouts: As seen in the TOTAL3 and TOTAL2 charts, structural bullish patterns often precede broad market rallies.
While no single indicator guarantees an alt season, the convergence of multiple signals increases confidence in a sustained move.
Key Altcoin Market Indicators to Watch
To stay ahead of potential market shifts, investors should monitor several key metrics:
- Altcoin/Narrative Trends: Look for rising interest in sectors like AI-driven tokens, real-world asset (RWA) tokenization, modular blockchains, and memecoins with cultural traction.
- Exchange Flows: Large inflows to exchanges may signal profit-taking; outflows suggest accumulation.
- Funding Rates: Elevated long funding rates can indicate over-leverage and potential corrections.
- On-Chain Activity: Increasing transaction counts, active addresses, and smart contract interactions reflect genuine usage growth.
These data points help separate hype from sustainable momentum—critical during volatile phases.
Frequently Asked Questions (FAQ)
What is an alt season?
An alt season occurs when alternative cryptocurrencies (altcoins) significantly outperform Bitcoin in price growth. During this period, capital flows into smaller-cap digital assets, often driven by speculation, innovation cycles, or broader market optimism.
How do you know when an alt season is starting?
Early signs include:
- Breakouts in aggregate altcoin indices like TOTAL2 or TOTAL3
- Declining Bitcoin dominance
- Increased trading volume across major altcoins
- Growing social media and search interest in non-BTC cryptos
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Can technical analysis predict alt season accurately?
While no method is foolproof, technical analysis—especially when applied to broad market indices—can identify high-probability turning points. Patterns like the Inverse Head and Shoulders or breakout from consolidation channels have historically preceded major rallies.
Which altcoins tend to perform best during alt season?
Performance varies by cycle, but common outperformers include:
- High-beta large caps (e.g., SOL, ADA, AVAX)
- Emerging layer-1 blockchains
- Tokens tied to trending narratives (e.g., AI, DeFi 2.0, gaming)
- Viral memecoins with strong community backing
Is it too late to enter before alt season?
Timing the exact start is difficult. However, positioning early—especially after confirmed technical breakouts and with risk-managed strategies—can capture significant upside. Dollar-cost averaging (DCA) into diversified altcoin baskets is a prudent approach.
What risks should I watch for during alt season?
Key risks include:
- Overheated markets leading to sharp corrections
- Low-quality projects pumping on hype without fundamentals
- Regulatory scrutiny on specific tokens or sectors
Always conduct due diligence and avoid emotional trading.
Final Thoughts: Preparing for Potential Altcoin Growth
The transition of the TOTAL3 chart from bearish to bullish is more than just a technical nuance—it’s a potential harbinger of broader market change. Combined with historical pattern repetition in the TOTAL2 index, the evidence suggests that conditions may be aligning for an upcoming alt season in 2025.
While confirmation awaits a decisive breakout above key resistance levels, proactive investors can use this time to research promising projects, set alerts on key metrics, and prepare entry strategies. Whether you're a seasoned trader or a long-term holder, understanding these cycles enhances your ability to navigate volatility and capitalize on opportunity.
As always, approach with caution, manage risk wisely, and let data—not emotion—guide your decisions.