Bitcoin News Today: Altcoin Hopes Ride on Fed's Pen as Market Waits for Season to Begin

Altcoin market capitalization has surged past $1.50 trillion, with Bitcoin’s dominance slipping below 60%, fueling speculation about the potential onset of a new altcoin season. This trend aligns with increasing expectations for a rate cut by the US Federal Reserve, which traders see as a catalyst for capital rotation into risk assets like cryptocurrencies [1]. As of late August, Bitcoin dominance stood at 58.47%, marking a significant decline from its peak of 65.91% on June 26. This shift suggests a growing allocation of capital from Bitcoin to altcoins [1].

FedWatchTool, an aggregator of market expectations based on 30-day Fed Funds Futures, reports a 97.6% probability of a 25 basis point (bps) rate reduction at the Fed’s September 17 meeting. This expectation is bolstered by recent economic indicators such as the 0.9% jump in US producer prices last month, attributed to tariffs imposed by Donald Trump. The August Producer Price Index (PPI) data, scheduled for release on September 10, will further shape the Fed’s decision-making. A rate cut could help temper inflation in the short term and inject liquidity into risky assets, including the crypto market [1].

Meanwhile, technical indicators suggest a potential breakout for altcoins. The total market capitalization of the crypto market excluding Bitcoin (referred to as TOTAL2) forms a symmetrical triangle pattern on daily charts. The Total2 index is currently near $1.50 trillion, and a breakout above this level could trigger a rally beyond the all-time high of $1.69 trillion recorded in mid-August. However, a drop below $1.50 trillion would invalidate this pattern and diminish hopes for an altcoin season [1].

Despite these bullish signals, market sentiment remains mixed. The CoinMarketCap Altcoin Season Index, which measures the performance of the top 100 altcoins against Bitcoin over the past 30 days, shows 53 altcoins outperforming Bitcoin. However, a confirmed altcoin season requires 75 altcoins to surpass Bitcoin’s performance. This metric places the market in a “halfway” phase. Additionally, the Fear and Greed Index is at 44, signaling neutral sentiment as volatility returns. While elevated sentiment is typically a prerequisite for capital to flow into altcoins, the current environment suggests that conditions are not yet fully aligned for a broad-based altcoin rally [1].

Historical data also complicates the outlook. Past altcoin seasons have often been delayed following Fed rate cuts, with the market initially favoring Bitcoin or gold over altcoins. The Altcoin Season Index currently stands at 61, indicating movement toward a potential season but still below the 75 threshold required for confirmation. Charts on the TOTAL3 index, which tracks altcoin market cap excluding Bitcoin and Ethereum, show that altcoins remain in a four-year compression phase. While a breakout could drive a surge in market capitalization, a breakdown would likely prolong the underperformance of altcoins relative to Bitcoin [3].

As the Fed’s September 17 meeting approaches, market participants remain divided. Some analysts argue that a rate cut could provide the necessary liquidity to ignite an altcoin rally, while others warn that economic data, including a 3.3% GDP growth and 2.9% core PCE inflation, suggests the Fed should avoid easing. A repeat of the 2024 scenario, where a rate cut briefly boosted altcoins before triggering a sharp reversal, is a concern for many traders [2]. The outcome of the Fed’s decision, coupled with macroeconomic conditions and institutional investor behavior, will be critical in determining whether the altcoin season can fully materialize.

Source:

[1] Altcoin season is loading as US Federal rate cut bets fuel optimism (https://www.mitrade.com/insights/news/live-news/article-6-1094435-20250904)

[2] Fed Rate Cuts: Why Experts Say 99% of Traders Are Wrong (https://beincrypto.com/experts-warn-against-fed-rate-cuts/)

[3] Altcoin Market Cap Shows 4 Years of Compression (https://cryptodnes.bg/en/altcoin-market-cap-shows-4-years-of-compression-whats-next/)