Ethereum’s current rally has reignited talk of an incoming altseason, but not everyone is convinced the party will last.

Market intelligence platform Santiment has warned that growing chatter about an altseason could signal an impending spike in volatility, citing historical patterns of market reversals following crowd euphoria.

Signs of Altseason Emerge

Over the past three months, ETH has staged a remarkable comeback, climbing more than 110% per data from CoinGecko, to reach $3,732. The asset is also up nearly 20% in the last seven days, vastly outpacing the broader crypto market’s 3.8% gain in the same period.

Whale activity has followed suit, with more than 500,000 ETH accumulated by large holders in the past two weeks, according to on-chain analyst Ali Martinez. Fellow market watcher Chyan noted on July 23 that ETH’s run has pushed social volume and dominance toward year-to-date highs as the asset creeps toward $4,000.

“CT’s heating up. Charts stirring. Just one spark away,” posted Chyan.

Their observations align with a recent CryptoQuant analysis showing altcoin volume on Binance Futures hit $100.7 billion, the highest since February. With ETH leading large caps like Solana and XRP, experts see a clear sign that capital is rotating away from Bitcoin.

Meanwhile, BTC’s dominance has dropped below 59%, down 8.5% in recent weeks, while ETH’s has climbed to 11.2%. Yesterday, Swissblock analysts said in a report that altseasons typically begin when the flagship cryptocurrency loses strength and altcoins break out broadly, a scenario that is currently unfolding.

Volatility Looms as Bulls Test Resistance

Despite the optimism, not all signals point to a smooth ride ahead. According to Santiment, crowd belief in an altseason often precedes short-term shakeouts.

“When the crowd begins to perpetuate that we are in ‘altseason,’ beware of some upcoming volatility,” the analytics firm cautioned. “Crypto prices historically move up most prominently during periods of crowd disbelief.”

Market strategist  Alex Kuptsikevich also noted that investors are starting to scale back BTC exposure in favor of altcoins, increasing the risk of abrupt corrections.

Technically, Ethereum is nearing major resistance near the $3,800 level, where it has twice failed to break higher in the last seven days. The asset remains 23.4% below its all-time high of $4,878 set in November 2021, but momentum is building. Over the past 30 days, ETH is up 67%, and more than 43% in the last two weeks, indicating sizable capital inflows.

Yet with about $45 billion in daily trading volume and rising retail interest, the world’s second-largest cryptocurrency could be heading for a cooling-off phase if traders begin to take profits or if BTC experiences further pullback. CoinGlass data, however, suggests that the market remains far from its bull market peak, a potential signal that the broader rally may still have legs.