Traders Shift Focus to Revenue as Early Signs of Altseason Emerge

Capital rotates toward utility-driven tokens

Traders are showing early signs of selecting specific assets ahead of a potential "altseason," with capital moving toward protocols that generate revenue. While an official altcoin season has not yet been declared, market rotations are already visible across various sectors.

Data indicates that investors are becoming more discerning. Instead of buying a wide range of tokens indiscriminately, participants are focusing on projects with clear business models. This trend contrasts with previous cycles where speculation often drove broader market moves.

Key performance metrics

• The memecoin launchpad token PONS rose more than 350% over the past 30 days.
• Uniswap (UNI), Arbitrum (ARB), and AI-focused NEAR saw gains of over 110%, 150%, and 180% respectively.
• Privacy token Zcash reached a record high above $1,600 last week.
• CoinMarketCap's Altcoin Season Index stands at 64 out of 100, below the 75 threshold required to officially declare a new season.
• The top 10 altcoins now represent roughly 80% of the total altcoin market capitalization.

Revenue generation drives recent gains

David Hoffman, host of the Bankless podcast, noted that many of the top-performing tokens share a common trait: they generate revenue. He pointed to assets like UNI, ARB, Jupiter (JUP), and Ondo (ONDO) as examples of this trend. According to Hoffman, the current rally appears driven by utility rather than pure speculation.

Among the 20 largest gainers in the past week, only two were memecoins. Pudgy Penguins was the sole memecoin to make the list recently. However, 1inch co-founder Sergej Kunz cautioned that memecoins still showed the strongest growth among buyers over the last 30 days, even as other sectors gained attention.

Market concentration and selective participation

Talos, a trading firm, reports that capital is clustering around a smaller number of assets rather than spreading broadly. Samar Sen, head of international markets at Talos, stated that the top 10 altcoins account for about 80% of the market cap, up from 70% at the end of 2024. This suggests investors are concentrating on specific narratives and ecosystems.

Sen described the current pattern as "breadth before depth," where more wallets are buying a wider variety of tokens but in smaller amounts. This indicates a cautious approach where users participate selectively rather than committing large sums all at once.

Diverging views on market drivers

While some experts see a shift toward fundamentals, others see a mix of competing narratives. Michael Egorov, founder of Curve Finance, observed increased interest in protocols with actual use cases and institutional demand, particularly in stablecoins and real-world financial integration.

In contrast, Kunz noted that the market remains a "jumble of competing narratives." Activity is seen in privacy tokens, AI projects, tokenized assets, and memecoin launchpads simultaneously. Recent trading pairs on platforms like Robinhood show categories overlapping, with tokenized stocks being traded against memecoins.

Changing participant landscape

Dealer participation in altcoin trading has dropped significantly, falling from 65% at the end of 2024 to about 32% in September. Despite this, buying trends remain strong. Sen explained that this differs from the last rally, where market makers played a larger role.

Easier access through mainstream platforms has lowered barriers to entry, broadening retail participation. Additionally, professional traders now have advanced tools like wallet tracking and copy trading to identify where capital is moving across different chains and protocols.

What remains uncertain

It is too early to determine if this cycle will be defined by fundamental utility or if it will revert to meme-driven speculation. The official Altcoin Season Index has not yet crossed the 75-point threshold. Furthermore, while revenue-generating protocols are gaining traction, the extent to which this trend will sustain a full altseason remains unconfirmed.

• Cointelegraph