Altcoin Season Slows Down Amid Israel‑Iran Conflict

The altcoin market, which had seen steady growth earlier this year, is now showing signs of losing momentum. Heightened geopolitical tensions, particularly the conflict between Israel and Iran, are weighing heavily on global markets, and crypto is no exception. While Bitcoin (BTC) continues to hold above the $100,000 mark, altcoins, which tend to be more reactive to external pressures, are starting to falter.

Investors Turn to Bitcoin Amid Rising Global Tensions

Geopolitical instability in the Middle East is driving a flight to safety in crypto markets. Since Israel escalated military operations against Iran on June 13, investors have increasingly rotated into Bitcoin, pushing its dominance up to nearly 65%.

The shift underscores Bitcoin’s evolving role as a perceived safe-haven asset. Market participants are treating BTC like digital gold, especially during periods of conflict, leading to significant outflows from altcoins and increased stablecoin demand.

Altcoins outside the top 10 have been hit hardest. Even Ethereum hasn’t escaped the pressure: the weakening ETH/BTC ratio highlights Bitcoin’s relative strength in this cycle.

Perceived Stability Drives Capital Toward Bitcoin

In previous market cycles, Bitcoin was often seen as a starting point for crypto investors, rather than their end goal. But that perception is evolving. According to Agne Linge, Head of Growth at WeFi, global instability is pushing investors toward assets considered safe havens. “It used to be gold and Treasuries,” she told BeInCrypto. “Now, Bitcoin is clearly part of that conversation.”

In fact, Bitcoin dominance (BTC.D) has been on a steady rise since the conflict began, briefly touching a multi-year high of 65.95% on Sunday before pulling back slightly.

Meanwhile, the altcoin market cap continues its downward trend. These shifts reflect investor reactions to broader macroeconomic factors. The current risk-off sentiment, driven by the Israel-Iran conflict and global instability, has reshaped short-term expectations for altcoins.

Ethereum’s weaker performance compared to Bitcoin stands out. Since many altcoins depend on the Ethereum network, a decline in ETH usually pulls the entire ecosystem down. The stagnant ETH/BTC ratio further highlights that capital hasn’t yet returned to altcoins.

Market Data Suggests Altcoin Season Is on Hold

The Altcoin Season Index provides a formal measure for identifying altcoin market cycles. A genuine altcoin season requires at least 75% of the top 50 altcoins to outperform Bitcoin over a rolling 90-day timeframe. Currently, this figure stands at a mere 16%.

While this suggests altcoins are currently underperforming, it does not imply a permanent decline. Market participants aiming for an altcoin rally in the near term should adjust their expectations accordingly. Significant upside in smaller-cap tokens is unlikely until geopolitical uncertainties diminish or Bitcoin’s bullish momentum moderates.

There’s also the issue of liquidity. During periods of high uncertainty, trading volumes tend to contract outside of major assets. That’s happening now. While Bitcoin and stablecoins remain liquid, smaller tokens are seeing thinner order books, which can accelerate both declines and short-lived price surges. In short, the environment is not currently built to support an altcoin resurgence.

Even positive drivers like protocol upgrades, supportive regulations, or new product launches are failing to make an impact right now. With all eyes on macroeconomic events, altcoin stories are getting drowned out.

Outlook for the Altcoin Market

Crypto markets naturally move in cycles, and the current BTC-driven phase won’t last forever. But altcoin season doesn’t just happen; it needs the right mix of confidence, liquidity, and macro stability. Right now, we’re missing all three.

Bitcoin is likely to remain the market’s anchor while tensions between Israel and Iran persist. If these tensions worsen, altcoins could take another hit. Conversely, any diplomatic progress could quickly boost risk appetite and trigger a shift back to altcoins.