The altcoin market has become a source of deep frustration for crypto investors during this cycle. Despite numerous forecasts from analysts, a clear and sustained altcoin phase has yet to appear in recent months.
This has led to growing frustration as traders wait for a broad breakout among altcoins. But according to crypto analyst Sykodelic, that frustration misses the bigger picture. Altcoins have not failed because the asset class is finished. They have failed to move because the macro backdrop that normally leads to major altcoin expansions never arrived.
Altcoins Are Stuck In A Liquidity Desert
Altcoins are the part of the crypto market most dependent on excess liquidity. They tend to perform best when money is loose, economic activity is improving, and crypto participants are willing to move further out of Bitcoin and invest in other cryptocurrencies. That environment, according to Sykodelic, has never truly shown up in force this cycle.
The chart Sykodelic shared places the OTHERS index, which tracks the total market capitalization of cryptocurrencies outside the top ten, alongside two macro indicators: the Federal Reserve Net Liquidity and the Purchasing Managers’ Index (PMI). The interesting thing is that those three have always moved in the same direction.
During the 2020/2021 cycle, for example, all three moved in the same direction. The Fed Net Liquidity rose very fast, PMI was in expansion, and the OTHERS index increased from a market cap below $100 billion to almost $600 billion.
The current cycle has told a different story. Fed Net Liquidity spent the better part of two years in a prolonged ranging pattern and oscillating without a clear directional trend. The PMI, meanwhile, spent most of that stretch in contraction, registering below 50 for 26 consecutive months before returning to expansion in January 2026. The OTHERS index, reflecting these conditions faithfully, has chopped sideways without the rally needed for an altcoin season.
The Setup For An AltSeason May Finally Be Forming
Once the diagnosis is established, the next step is what could come next for the possibility of an altcoin season. Interestingly, Sykodelic’s analysis also looks at what may be changing now for the altcoin market. According to the analyst, the correct environment is being built for the alt expansion.
His chart suggests Fed net liquidity has bottomed and started to reverse upward, while PMI has moved back above contraction territory and into expansion. For instance, the ISM Manufacturing PMI registered 52.6% in January 2026, which is a 4.7-percentage-point jump from December’s reading of 47.9%. The PMI fell to 52.4 in February 2026 from 52.6 in January but remained above market expectations of 51.8.
Those two changes, taken together, could begin building the exact background that altcoins were missing. The green projection box to the right of the current price, as drawn on the chart above, targets a move back to the $560 billion range for the OTHERS index market cap.
