Altcoin Index flashes Bitcoin season – Why THESE signals say otherwise

Is the market manipulating on-chain signals?

Interestingly, the Altcoin Season Index is set to close August at around 29 points, just four points away from full-blown Bitcoin season. The key takeaway? The index is down 56% from its early-August peak of 67, showing that altcoin momentum has weakened significantly over the month.

But the technicals tell a different story. As the chart below shows, TOTAL2 (total market cap excluding Bitcoin) has gained over 17% during the same period, while Bitcoin dominance increased by just over 2%. Thus, the altcoin market grew more than 8x faster than the increase in Bitcoin dominance. This suggests that funds are flowing into altcoins at a much higher rate than suggested by the Altcoin Season Index.

Naturally, this begs the question: Is the index giving a misleading signal on altcoin strength?

According to the Altcoin Season Index, the last major altcoin rotation was seen in mid-May, when the index dropped to 22. What followed was a two-month run-up in altcoins, while Bitcoin dominance faced multiple rejections at the 60% level. Fast-forward to now, and the index is only 7 points above the same low, yet the technicals are telling a very different story, with TOTAL2 holding strong.