The cryptocurrency market has been experiencing a significant shift in dynamics, with the Total3 market capitalization reaching a record high of $1.18 trillion. This metric, which tracks the market capitalization of all cryptocurrencies excluding Bitcoin (BTC) and Ether (ETH), has been gaining momentum in recent weeks. The Total3 diagram is widely used by traders as an indicator of the health of the Altcoin market, providing valuable insights into capital rotation patterns and the strength of the wider Altcoin ecosystem.
USDT Dominance Declines
The dominance of USDT, a stablecoin, has been declining sharply, falling by 11.8% last week to 4.18%. This decline is often seen as a signal that investors are moving their capital from stablecoins to more risky assets in search of higher returns. A decline below 4% would mark the lowest USDT dominance since January 2025. The weekly chart of USDT dominance shows a significant drop, indicating a potential shift in investor sentiment.
Crypto trader Honey has expressed a bullish outlook, identifying a breakout from a cup-and-handle pattern in the weekly chart. According to Honey, “We officially broke out of the cup and handle, which is extremely bullish for our beloved altcoins. Total3 to $1.6 in the coming weeks.”
Data Indicates a Slowly Brewing “Altseason”
A closer look at the performance data of the top 100 crypto assets reveals a growing strength and complexity in the emerging Altcoin cycle. The data shows a decisive acceleration of the Altcoin impulse over the past three months, with cumulative returns exceeding those of Bitcoin by more than six times. This shift suggests that Bitcoin is continuing to anchor the market, while capital is increasingly being rotated into riskier assets, a hallmark of an “altseason”.
However, not all indicators are fully aligned. The average returns for the top 100 crypto assets show that only 60% of the current altcoin profits are below the threshold of 80% to 90%, which typically defines an established altseason. Meanwhile, the Altcoin season index has risen to 69%, with the critical 75% line nearing completion, which would confirm widespread Altcoin dominance.
Stablecoin Reserves Drop
Kryptoquant has noted that ERC-20 stablecoin reserves on exchanges have been declining since September 22, with Binance accounting for $3 billion (75%) of the total. The combined stablecoin reserves have dropped from $45 billion to $42 billion. Large outflows often follow market profits, indicating that investors are taking profits and moving capital out of exchanges. Lower stablecoin reserves reduce the “dry powder” available for purchasing, limiting buying power and increasing the market’s susceptibility to short-term declines.
This article does not contain investment advice or recommendations. Every investment and trade movement involves risk, and readers should conduct their own research before making any decisions.
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