The cryptocurrency market is entering a pivotal moment as Donald Trump prepares to return to the White House, reigniting speculation about a potential shift in U.S. digital asset policy. While Bitcoin remains the dominant player, many industry experts believe that altcoins—cryptocurrencies with smaller market capitalizations—could see outsized gains in a more crypto-friendly regulatory environment.
With Trump’s inauguration scheduled for Monday, market participants are closely watching for signals that could trigger an “altcoin season,” where smaller digital assets outperform Bitcoin. But before diving into these high-potential assets, investors must understand the risks, opportunities, and key indicators shaping this evolving landscape.
Why Altcoins Could Outperform Bitcoin
Altcoins such as Solana (SOL), XRP, Polygon (MATIC), and Filecoin (FIL) have historically shown greater volatility—and higher growth potential—than Bitcoin. According to Samir Kerbage, Chief Investment Officer at Hashdex, altcoins are poised to benefit more from regulatory clarity under a Trump administration.
“Bitcoin has always had that regulatory certainty, while altcoins have never had that regulatory certainty,” said Katherine Kirkpatrick Bos, General Counsel at StarkWare, a crypto infrastructure company. This lack of clarity has kept many institutional investors on the sidelines.
Under current U.S. policy led by outgoing SEC Chair Gary Gensler, Bitcoin is classified as a commodity, while numerous altcoins—including XRP, Algorand, and Axie Infinity—are treated as securities. This distinction is critical: securities face stricter regulations and compliance requirements, making them less attractive to large-scale investment.
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If the incoming administration appoints pro-crypto figures like former SEC member Paul Atkins as the new chair, the classification of altcoins could shift dramatically. A clearer regulatory path could boost investor confidence and open the floodgates for institutional capital.
The Case for Regulatory Clarity
Regulatory uncertainty has long been one of the biggest barriers to mainstream crypto adoption. When assets are labeled as securities without clear guidelines, developers and investors face legal risks that stifle innovation.
Kerbage emphasizes that once regulators provide definitive classifications for major altcoins, investor hesitation may fade. “If there's more clarity on the classification of cryptocurrencies other than bitcoin, investors might feel more comfortable allocating to such assets, potentially pushing up their prices.”
This clarity could also pave the way for exchange-traded funds (ETFs) focused on altcoins. Currently, only Bitcoin and Ethereum have approved spot ETFs in the U.S. However, asset managers like Grayscale, Bitwise, VanEck, and 21Shares have already filed applications for Solana and XRP ETFs.
Approval of these products under a supportive administration would be a game-changer—bringing institutional liquidity, enhanced market credibility, and broader public access to altcoin investing.
Altcoin Season: How to Spot It
Not all rallies are created equal. In crypto markets, an “altcoin season” refers to a sustained period when altcoins outperform Bitcoin in terms of price growth and trading volume.
Analysts at QCP Capital suggest monitoring Bitcoin dominance—a metric that measures Bitcoin’s market cap as a percentage of the total crypto market. As of Friday, Bitcoin dominance stood at approximately 57.6%. A break below the key support level of 57.3% could signal the start of an altcoin-led rally.
Bitcoin itself is nearing a psychological milestone of $100,000, trading around $104,337—just 3% below its all-time high of $108,309 set in December. But due to its massive market cap, moving Bitcoin significantly requires enormous capital inflows.
“In contrast, altcoins have much lower market capitalization now,” said Sidney Powell, CEO and co-founder of Maple Finance. “It takes a lot more buying activity to move the needle on bitcoin.”
Another useful indicator is the Altcoin Season Index, developed by BlockchainCenter. The index tracks whether altcoins have outperformed Bitcoin over a 90-day period. At 55, it's currently below the 75 threshold needed to confirm an altcoin season. However, if it sustains above that level, it could confirm a broader market rotation into smaller-cap cryptos.
Risks and Investor Caution
Despite the optimism, experts urge caution. Altcoins are inherently riskier than Bitcoin due to higher volatility, lower liquidity, and varying degrees of project legitimacy.
“Some could just be scams,” warned StarkWare’s Bos. Investors must conduct thorough due diligence on each project’s use case, team credibility, tokenomics, and real-world utility.
Additionally, Powell noted that altcoins face more limited liquidity compared to Bitcoin. This means large trades can cause sharp price swings, increasing risk for both retail and institutional players.
There’s also no guarantee that Trump will deliver on his pro-crypto promises. While he received endorsements from key figures in the crypto space during his campaign, actual policy outcomes depend on congressional cooperation, regulatory appointments, and geopolitical factors.
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Frequently Asked Questions (FAQ)
Q: What are altcoins?
A: Altcoins are any cryptocurrencies other than Bitcoin. Examples include Ethereum, Solana, XRP, and Polygon. They often offer different features or use cases beyond simple value transfer.
Q: Why might altcoins outperform Bitcoin under Trump?
A: Because many altcoins currently lack regulatory clarity. A pro-crypto administration could classify them as commodities instead of securities, unlocking institutional investment and ETF approvals.
Q: What is Bitcoin dominance?
A: It’s a metric showing Bitcoin’s market cap relative to the entire cryptocurrency market. A falling dominance often signals increased investor interest in altcoins.
Q: Are altcoin ETFs available in the U.S.?
A: Not yet. Only Bitcoin and Ethereum spot ETFs are currently approved. Applications for Solana and XRP ETFs are pending and could gain momentum under favorable regulation.
Q: How volatile are altcoins compared to Bitcoin?
A: Altcoins tend to be significantly more volatile. While this increases risk, it also creates potential for higher returns during bullish market cycles.
Q: Should I invest in altcoins now?
A: Only after careful research. Consider your risk tolerance, portfolio diversification goals, and the specific fundamentals of each project before investing.
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Final Thoughts
While Bitcoin will likely remain the cornerstone of most crypto portfolios, the next phase of digital asset growth may come from smaller-cap cryptocurrencies. Regulatory shifts under a Trump administration could provide the catalyst altcoins need to enter a sustained bull run.
However, opportunity comes with risk. Investors should monitor key indicators like Bitcoin dominance and the Altcoin Season Index while staying informed about regulatory developments.
As always, sound investment decisions stem from research—not speculation. Whether you're eyeing Solana, XRP, or emerging projects with strong utility, understanding the underlying technology and market dynamics is essential.
With strategic planning and disciplined risk management, the coming months could present one of the most compelling opportunities in recent crypto history.