As the market cycle unfolds, altcoins are finding stability at critical support zones, setting the stage for their next significant move. In today’s update, we’ll dive into the broader market structure to evaluate current trends and potential shifts in momentum.

Additionally, we’ll factor in key macroeconomic influences to offer a well-rounded outlook on what’s next for altcoins.

Here’s what we’ll cover today:

📊 Altcoin Market Overview: Assessing TOTAL3 & OTHERS to see how altcoins are positioning at key levels.
🔍 Bitcoin vs. Altcoins: Analyzing BTC Dominance (BTC.D) and OTHERS Dominance (OTHERS.D) to identify potential capital rotations.
📈 Key Reversal Signals: Watching OTHERS/BTC and ETH/BTC for potential altseason triggers.
📅 Macro & Upcoming Catalysts: Analyzing how major events like the FOMC meeting could impact altcoins.
🚀 Opportunities Ahead: What’s next if momentum picks up and key resistance levels are reclaimed?

Let’s dive in!

While still being in a consecutive downtrend, altcoins managed to find some short-term relief in the past days, as can be seen with the TOTAL3 altcoin index reclaiming the major area of interest at $790B. The OTHERS index managed to climb 18% from its bottom, however it’s currently sitting just below the key level of $240B. Objectively, there are two major scenarios to talk about at this stage. 

Bearish Scenario: Given that altcoins have been in a consecutive downtrend since last December, the simplest way to put it is: "The trend is your friend until proven otherwise," meaning the downtrend could continue until a significant shift in sentiment takes place. For TOTAL3 this would mean yet another retest of the key level at $716B and for OTHERS a continuation to the next lower support level at around $190B.

Bullish Scenario: In a bullish case, we could see a major shift in market sentiment leading to a trend reversal in altcoins, likely driven by external macroeconomic factors such as a change in the ongoing tariff war situation or the Fed's monetary and balance sheet policies. In that scenario, TOTAL3 could reclaim the key level at $850B, and OTHERS could reclaim support at $240B, both breaking their consecutive downtrends and re-entering bullish market phases.

To assess the current dominance of both Bitcoin and the altcoin sector, we need to examine the consecutive Bitcoin Dominance (BTC.D) and OTHERS Dominance (OTHERS.D) charts. This helps us easily identify strength or weakness in each sector and predict overall market trends.

While Bitcoin Dominance remains in a major bullish uptrend, it has traded down since the last altcoin report, marking its highest daily candle close last Tuesday. We've been hovering around the 62% level since early February, and given that this major key area has historically acted as both support and resistance, it could serve as a potential top and pivot point for BTC.D.

Note that altcoin season typically starts when we see a sudden and strong drop in bitcoin dominance, signaling that capital is rotating from bitcoin into altcoins.

OTHERS Dominance continues to range sideways between 8% and 9%. In a bearish case, expect further declines, potentially retesting the recent lows at 7.80% and leading to more altcoin sell-offs. In a bullish case, a flip of resistance at 9% could occur, turning it into support again, and if a major trend shift happens, reclaiming the historical trend line would signal strong momentum and increased capital flowing back into altcoins.

To catch potential signs of major market pivots and key reversals early, we need to look at both OTHERS/BTC and ETH/BTC. These charts have historically been very accurate at predicting the start of phases where altcoins significantly outperformed Bitcoin, and while past performance is no guarantee of future success, these metrics help us assess the current market situation.

The OTHERS/BTC chart shows a golden historical trend line that has always been accurate in predicting the start of altseason, with initial price bounces on the trend line. We reached the line on February 3rd and have touched it three times since then, never breaking below. While previously, one bounce has been enough to spark a rally, it seems we are currently waiting for further signals until the trend on this chart reverses and altcoins begin to outperform Bitcoin. Although this current behavior is unusual, it is definitely unproblematic as long as we stay above the trend line.

Another chart that helps us spot potential market shifts early is ETH/BTC. Note that we plotted the Federal Reserve Total Assets (Fed Balance Sheet) below the chart and marked the previous balance sheet pivot with a vertical golden line. Observe how, in the previous cycle, ETH/BTC did not bottom out until the Fed announced a pivot in their balance sheet policy and ended quantitative tightening and how that went hand in hand with the major trend shift in ETH/BTC. The current consensus is that the Fed will conclude the balance sheet rundown by mid-2025, possibly as early as later today. 

The biggest upcoming catalyst influencing Bitcoin and altcoins this week is undoubtedly the FOMC meeting and interest rate decision taking place later today. 

This meeting presents a challenging task for Fed Chair Jerome Powell. While the Fed is widely expected to keep rates unchanged, Powell must carefully balance two objectives: First, he needs to reassure markets that the economy can withstand elevated rates, despite persistent inflation. Second, he must leave room for future rate cuts if growth weakens, without creating unrealistic expectations.

Markets are pricing in three rate cuts this year, starting in June. However, most economists expect only two, which is likely in line with the economic projections Fed officials will present. At the same time, the Fed is expected to lower its 2024 growth forecast while raising its core inflation outlook. Powell will likely refrain from committing to rate cuts unless inflation shows convincing progress toward the 2% target.

Another interesting factor to watch is the FOMC statement, including comments on the Fed's balance sheet policy and whether or not the Fed halts quantitative tightening. As shown on the ETH/BTC chart, altcoins typically don't experience significant trend reversals until the Fed stops QT.

After considering various charts, data, and macroeconomic influences, we are in a position to objectively assess the market's current direction and potential upcoming trend changes. At Sandman Research, we still expect a phase of altcoins outperforming Bitcoin to arrive and have positioned ourselves accordingly. From our perspective, the current situation with Trump's tariff war presents an obstacle, raising uncertainty and delaying investor confidence in a strong economic growth outlook.

We remain heavily focused on the AI, RWA, and gaming narratives in altcoins and continue monitoring potential category leaders within these areas. Once the dust settles and the economic outlook becomes clearer, we expect sentiment to shift, with risk assets gaining the spotlight again, and altcoins should take center stage as we've seen in 2017 and 2021.

We hope this report provided valuable insights into the latest market trends and key geopolitical developments. To stay ahead with comprehensive analysis and real-time updates, make sure to subscribe to our email newsletter – you won't want to miss what's coming next!

As always, stay informed, stay prepared, and have a great week ahead!

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