Crypto analyst Dennis Liu, known online as VirtualBacon, expressed his strongest bullish sentiment on altcoins in four years, attributing the outlook to macroeconomic conditions and current market valuations.
Liu credited the Federal Reserve's balance sheet expansion since November 2025 as a potential catalyst for altcoin performance. He drew a comparison to 2020-2021, when rapid Fed balance sheet growth coincided with altcoins outperforming Bitcoin, versus the contraction period from October 2023 to October 2025 when they underperformed.
Valuation and Market Structure
Liu pointed to three primary factors supporting his outlook. First, the current Bitcoin cycle remains in its early stages, historically a favorable period for altcoin trading. Second, the altcoin-to-Bitcoin ratio, measured as TOTAL2 excluding stablecoins divided by Bitcoin, sits at 0.48—close to a floor around 0.40 and barely recovered from bear market levels of 0.45-0.46 recorded during April through June.
Third, Liu noted that altcoins have retraced after a small breakout following Bitcoin's bottom, creating entry opportunities for traders rather than requiring purchases at elevated levels.
Probability Assessment
Despite his bullish outlook, Liu maintained cautious expectations. He estimated a 50% probability that altcoins will trade sideways relative to Bitcoin, a 40% chance of improvement, and a 10% chance of further underperformance. He suggested that even a flat ratio relative to Bitcoin could result in a stronger cycle than the 2023-2025 period.
Analyst Matthew Hyland supported this perspective, noting that the median altcoin is ahead of Bitcoin year-to-date in 2026—a condition not observed since 2021.
Current Market Activity
Recent price action has not aligned with these optimistic assessments. Bitcoin faced rejection below $85,000 and traded around $82,000, with overall crypto market capitalization declining more than $60 billion from its prior peak. Bitcoin's dominance over altcoins exceeded 58%, while Ethereum traded near $2,400 down 2% weekly.
