Why Analysts Are Turning Bullish on Altcoins in 2026

Why Analysts Are Feeling Bullish About Altcoins Again

Crypto analyst Dennis Liu, who shares his market insights under the name VirtualBacon, recently outlined a detailed positive case for altcoins. In a video shared on X, Liu stated that he is currently the most bullish on alternative cryptocurrencies that he has been in four years.

His optimistic outlook centers heavily on global macroeconomic factors. In particular, he pointed to shifts in the United States Federal Reserve balance sheet as the main engine that could drive better market conditions.

Liu believes these shifting macro conditions could make the current market cycle far more favorable for altcoins than the previous two-year period, which ran from October 2023 to October 2025.

How the Federal Reserve Drives Market Liquidity

To understand why Liu is so optimistic, it helps to look at central bank liquidity. The Federal Reserve balance sheet tracks the total value of assets held by the US central bank.

When the central bank expands its balance sheet, it essentially injects fresh capital into global financial systems. When excess liquidity enters the market, investors often look for high-growth opportunities, which can benefit riskier assets like altcoins.

During the major market boom of 2020 and 2021, the Fed balance sheet expanded rapidly. That rapid growth coincided with altcoins outperforming Bitcoin by a wide margin.

By contrast, from October 2023 through October 2025, the central bank reduced its balance sheet. This liquidity drawdown coincided with a period where altcoins generally struggled relative to Bitcoin.

However, the Federal Reserve balance sheet started growing again in November 2025. Liu views this renewed expansion as a crucial turning point for crypto markets.

"That condition alone, I believe, will be the deciding factor to give us a stronger altcoin cycle in this cycle," Liu explained.

Evaluating the Altcoin-to-Bitcoin Valuation Ratio

In addition to macroeconomic data, Liu relies on technical market metrics to measure altcoin value relative to Bitcoin.

His primary tool is the altcoin-to-Bitcoin ratio. This metric takes TOTAL2—the combined market cap of all cryptocurrencies except Bitcoin—subtracts stablecoins like USDT and USDCUSDC+0.03%, and divides the remaining number by Bitcoin's total market cap.

Liu measured this ratio at 0.48. That level puts it very close to what he considers a historic market floor around 0.40.

By comparison, during the tough bear market months between April and June, the ratio lingered around 0.45 to 0.46.

He highlighted that even though Bitcoin experienced price rebounds, altcoins have barely recovered on a relative basis. Based on this historical metric, altcoins remain comparatively inexpensive.

Market Timing and Entry Opportunities

Timing is another critical element in Liu's market thesis. He considers the broader Bitcoin cycle to still be in its early phases, which historically provides a favorable backdrop for trading altcoins.

Following Bitcoin's market bottom, altcoins experienced a modest initial breakout. Shortly after that movement, prices pulled back and retraced.

Liu views this pullback as a potential secondary entry window. It gives market participants a chance to evaluate positions after initial momentum builds, rather than buying into initial price surges.

Breaking Down Potential Market Scenarios

Instead of making absolute claims, Liu presented a probability-based model for how the altcoin market might unfold:

• 50% chance that altcoins move sideways relative to Bitcoin.
• 40% chance that altcoins show relative strength and outperform Bitcoin.
• 10% chance that altcoins experience further underperformance relative to Bitcoin.

Liu clarified that he is not strictly forecasting a complete repeat of the historic 2020-2021 bull run.

However, he pointed out that even if the altcoin-to-Bitcoin ratio stays flat, the overall environment could still prove more productive than the market conditions seen between 2023 and 2025.

Investors should keep in mind that market dynamics are inherently unpredictable. Sideways price action can extend longer than anticipated, and unexpected macroeconomic shifts can alter these probabilities.

Supporting Perspectives From Industry Analysts

Other market commentators have voiced similar observations regarding altcoin performance. Analyst Matthew Hyland backed this general outlook in a post on X.

Hyland noted that the median altcoin is outperforming Bitcoin year to date in 2026. This represents a trend that the market has not seen since 2021.

Based on his chart metrics, Hyland claimed that current market positioning mirrors conditions seen in early 2016 and mid-2020.

In a separate post, Hyland suggested potential speculative targets ranging from 1,000% to 100,000% for select assets over an entire market cycle.

It is important to treat extreme historical performance comparisons with healthy caution. Achieving multi-fold growth depends on sustained global liquidity, massive capital inflows, and favorable regulatory environments—factors that are never guaranteed.

A Quick Reality Check From Recent Price Action

While long-term liquidity theories offer an encouraging outlook, short-term price charts reminded traders that volatility remains a constant factor.

Bitcoin recently ran into heavy resistance just under $85,000. Following that rejection, BTCBTC+0.20% pulled back and traded near $82,000.

This sudden movement caused the overall cryptocurrency market cap to shed over $60 billion within a single day from its peak.

Bitcoin dominance—which measures BTC's share of the total market capitalization—remained firmly above 58%, according to data tracked by CoinGecko.

How Major Individual Cryptocurrencies Performed

Top altcoins displayed varied performance during the recent market pullbacks:

• EthereumETH+0.73% traded near $2,400, reflecting a 2% decline over the trailing seven days.
• Monero (XMR) bucked the downward market pressure, trading around $613 with an 8% gain over seven days.
• Bitcoin (BTC) settled near $82,000 following its pull back from the $85,000 level.

These diverging price tracks demonstrate that even during broader liquidity changes, individual cryptocurrencies can move independently based on specific market demand.

Final Summary for Crypto Observers

The combination of Federal Reserve balance sheet growth and low altcoin-to-Bitcoin valuation ratios gives analysts reasons to pay close attention to altcoins in 2026.

However, short-term market pullbacks and strong Bitcoin dominance show that the market remains in a delicate balancing act.

Past digital asset yields or past performance do not guarantee future returns or performance. You can monitor live market trends and prices directly on Bitkub Market.