Additionally, the supply of altcoins has exploded beyond repair. As of April 2025, there were almost 42 million different altcoins – an oversupply that far exceeds demand. This issue becomes even more striking when compared to previous crypto cycles. At the peak of the 2021 bull market, there were around 2.7 million tokens, whereas at the end of the 2017 bull run, there were “only” 13,241.

_{Source: Dune Analytics}

While these and other factors hold some truth, one fundamental reason explains why a full-blown altcoin season has yet to materialise: monetary policy looseness – or the lack thereof.

Net liquidity remains flat

At the time of writing, the US Federal Reserve (Fed) is continuing to reduce its overall balance sheet, decreasing liquidity from the financial system. At the same time, actions like the reduction of the reverse repo pool have added liquidity back into financial markets, offsetting the effects of quantitative tightening (QT) for the most part. Money market funds (MMFs), banks and other institutions usually store excess cash in reverse repo operations at the central bank. However, since most of this cash has now left the reverse repo facility, liquidity has been steadily flowing back into the markets, filling the gaps left by QT.

^{Source: Checkonchain.com}

Nonetheless, the stagnation of overall US liquidity over the past two years has created a challenging environment for digital asset investors – one where Bitcoin, as “digital gold”, is preferred over riskier, “tech altcoins”.

This trend is also reflected in the Top 200 Advance/Decline Line (ADL) Index, which tracks the cumulative market breadth of the 200 largest market cap-weighted crypto assets. It measures the difference between the number of advancing and declining assets within the index over time. An asset is considered to have advanced if its closing price is higher than its opening price for a given period.

Despite the overall uptrend in the price performance of the top 200 crypto assets since early 2023, the A/D line has been steadily declining, recently hitting new 365-day lows. This divergence suggests that while a handful of assets have driven the market higher, most altcoins are struggling, failing to participate meaningfully in the rally.

For example, Solana has been one of the few standout performers, whereas the majority of altcoins have only experienced short-lived relief rallies. Most still remain far from reclaiming their previous all-time highs in US-dollar terms.

_{Source: Jamies Coutts & Bloomberg}

No widespread altcoin season without Ethereum

One altcoin, which has died many deaths in recent months, is Ethereum, the flagship altcoin par excellence. Following the approval of Bitcoin Spot ETFs in January 2024, Ethereum experienced a brief surge in capital inflows.

However, this rotation failed to gain sustained momentum or surpass the capital flowing into Bitcoin – a key reason why Ethereum has yet to reach a new all-time high in US-dollar terms.

This contrasts sharply with the late stages of the 2021 bull market, when capital rotation into Ethereum outpaced Bitcoin, fuelling a broader altcoin rally. At the same time, the Altcoin Speculation Index soared to 94, signalling the peak of a full-blown altcoin season.

^{Source: Checkonchain.com}

This time around, the same index hit a high of 65 on December 24 of last year – well below the levels associated with a full-blown altcoin season. We firmly believe that for the market to experience a widespread, explosive altcoin rally, Ethereum must outperform in the ETH/BTC pair, meaning that Ether needs to outperform in Bitcoin-denominated terms. 

Using history as a guide

However, if history is any guide, Ethereum’s sustained outperformance against Bitcoin is unlikely without a significant easing of financial conditions. This shift would most likely require a major macroeconomic catalyst, such as the end of QT in the US.

A look back at 2019 supports this idea:

• In March 2019, the US Federal Reserve announced it would slow the pace of QT
• By July 2019, QT officially ended, accompanied by rate cuts
• Just two months later, in September 2019, ETH/BTC bottomed out, marking the start of Ethereum’s multi-year uptrend against Bitcoin

If a similar monetary pivot occurs, Ethereum could once again gain strength, potentially igniting a true altcoin season.

_{Source: Tradingview.com}

Important legal information

_{This publication is intended for information and marketing purposes only, and does not constitute investment advice or a specific individual investment recommendation. It is not a sales prospectus and does not constitute a request or an offer or a recommendation to buy or sell investment instruments or investment services, or to engage in any other transaction. Maerki Baumann & Co. AG does not provide legal or tax advice. Investors are therefore advised to obtain independent legal or tax advice concerning the suitability of such investments, since their tax treatment depends on the personal circumstances of the investor in question and is subject to change at any time. Maerki Baumann & Co. AG holds a Swiss banking license issued by the Financial Market Supervisory Authority (FINMA). Please note that Maerki Baumann & Co. AG does not provide legal or tax advice. The above information should not be considered as such. It is only an initial assessment without any claim to completeness or correctness. For a final and legally binding assessment, please contact a tax expert.}
 

Editorial deadline: 2 April 2025

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