Altcoins typically dump hard before altseason. Will history repeat?

CointelegraphPublished on 2025-10-14Last updated on 2025-10-14

Abstract

Will history repeat?

Crypto analysts speculate that the massive weekend leverage flushout, which wiped billions of dollars from the crypto markets, may have just paved the path for “altseason 3.0”
“Every major expansion in crypto has included sharp 30% to 60% resets along the way,” observed analyst and researcher ‘Bull Theory’ on Monday.

March 2020 saw almost 70% wiped off markets in the pandemic-induced black swan event, and May 2021 saw more than 50% wiped out. There were at least five other 30% to 40% altcoin slumps during the last bull market cycle.

The market crash in April this year had many calling it the beginning of the bear market. Yet “each of those wipes looked like the end [and] each was followed by the strongest rallies of the cycle,” the analyst added.

The previous bull market had multiple altcoin market flushes. Source: Bull Theory

Altcoins will bounce back

Altcoins are usually hit hardest during these epic market resets, and this was the case over the weekend with XRP (XRP) dumping at least 18%, Solana (SOL) 22%, Dogecoin (DOGE) 28%, Cardano (ADA) 25%, and Chainlink (LINK) 26% in just a day.

After the March 2020 flash crash, “we had a huge altseason where altcoins pumped 25x to 100x,” said analyst Ash Crypto before adding, “I think it will happen again.”

Meanwhile, analyst ‘Merlijn The Trader’ identified a setup for “altseason 3.0” with a monthly bullish MACD cross on the BTC/altcoins chart, the same pattern that occurred in 2017 and 2021.

Chart patterns are looking similar to those of previous cycles. Source: Merlijn The Trader

Total crypto cap falls back below $4T

The total crypto market capitalization dipped back below the psychological $4 trillion mark on Tuesday, despite the bullish sentiment regarding the recovery and a potential altseason.

Bitcoin (BTC) is leading losses with a 1.4% decline on the day as it fell below $113,500 on Tuesday morning. This comes at the same time as several altcoins were posting daily gains.
Additionally, Bitcoin dominance, another key indicator of altcoin performance, is forming its first red weekly candle in five weeks as it fell below 59% on Tuesday, according to TradingView.

AI Can No Longer Save Big Tech Stocks

Recently, after major Chinese internet companies disclosed their quarterly financial reports, an interesting phenomenon emerged: the stock prices of Tencent, Alibaba, Baidu, Kuaishou, and NetEase all fell. The sole exception was Xiaomi. The decline occurred despite these companies actively investing in and developing AI technologies. The consensus around AI's importance is stronger than ever, yet this very consensus is making it harder for AI alone to generate stock market premiums. The market's focus has shifted. Two or three years ago, simply announcing a large model or an "All in AI" strategy could boost valuations, as investors were judging who would secure a place in the AI era. Now, with nearly all major players having entered the AI arena, the key question has become: **What tangible change has AI brought to your company?** This question reveals six distinct challenges: * **Tencent** faces a capital allocation dilemma. Its core businesses (gaming, advertising) are highly profitable, and AI is enhancing their efficiency. However, massive AI investments (capital expenditure surged 176% YoY) are consuming this cash flow, altering the company's traditionally strong capital return model. The core question is: how much more needs to be spent? * **Alibaba** is attempting to rebuild part of its empire around AI, with a clear chain involving its Qianwen model, Alibaba Cloud, and AI infrastructure. While AI-related revenue is growing robustly, it has also triggered a massive reinvestment cycle (capex up 75% YoY), raising concerns that the company's renewed focus on profitability and shareholder returns might be undermined. * **Baidu** confronts a brutal race against time. Its core AI business is growing (up 25% YoY), but its legacy online marketing revenue is declining sharply (down 19%). The critical issue is whether its new AI-driven businesses can grow faster than its old search advertising engine shrinks. AI is not just an add-on but a necessary replacement. * **Kuaishou** presents a paradox. Its AI product, Kling, is a standout success, with revenue exceeding 850 million RMB (growth over 200% YoY), proving its commercial viability. However, this stellar performance is not yet large enough to offset slow overall group growth (revenue up only 1.4%), highlighting the gap between a "good" new business and one "big enough to change the company." * **Xiaomi's** primary growth engine is currently its electric vehicles, not AI. For Xiaomi, AI acts more as a foundational layer integrating its ecosystem of phones, cars, appliances, and robots. Its bet is that controlling numerous hardware endpoints could provide a significant future AI advantage, though this multi-front strategy (phones, cars, chips, AI) is capital-intensive. * **NetEase** offers a different perspective. It extensively uses AI in game development to boost efficiency and content creation but hasn't rushed to rebrand itself as an "AI company." Its core value still stems from gameplay, content, and operations. This suggests that not every internet company's worth needs to be redefined by AI; sometimes, AI is best as a powerful supporting tool. In conclusion, AI has not leveled the playing field. Instead, it acts as a **magnifying glass**, amplifying each company's existing strengths, weaknesses, cash flows, and historical burdens. With models and computing power becoming standard, the market is returning to fundamental questions: Is the core business healthy? Can AI be translated into revenue, profit, or efficiency gains? And what is the cost? The strong consensus on AI has made the "AI premium" elusive, leading to six different corporate destinies within the same AI era.

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