Early signs of an altcoin season are emerging, and the bull market is expected to reach its peak in the fourth quarter.
Written by: Ben Strack
Translated by: AididiaoJP, Foresight News
After Federal Reserve Chairman Jerome Powell's dovish remarks, it seems like a good time to implement a reallocation strategy, especially as macro factors increasingly impact the cryptocurrency market over time.
We still do not know what the Federal Reserve will decide at the meeting on September 17. However, for many, Powell's comments have a dovish tone, opening up the possibility for a rate cut next month.
If we look at the CME Group's FedWatch tool, based on the 30-day federal funds futures prices, as of noon on Monday, many believe a 25 basis point rate cut is likely, a sentiment that is much higher than a month ago:
While rate cuts are generally favorable for risk assets like Bitcoin, the reality is more nuanced. Bitcoin surged above $117,000 on Friday before retreating to below $111,000. The asset was trading at around $112,600 at 1:30 PM ET and has since fallen below $110,000.
Ruslan Lienkha, market director at YouHodler, believes that the broader trajectory of the cryptocurrency market will still depend on the macro backdrop.
"If inflationary pressures persist, the Federal Reserve may be forced to extend the pause again, limiting the lasting impact of a single rate cut," he told me. "Moreover, if a rate cut is seen as an emergency response to a recession, it could weigh on cryptocurrencies and other risk assets."
The best-case scenario? A rate cut is part of the Federal Reserve's successful efforts to achieve a soft landing.
"In this environment, given Bitcoin's status as the most mature digital asset, it may attract the majority of institutional capital inflows," Lienkha said. "Some altcoins may perform better because they have higher volatility and lower liquidity, which can amplify the gains of altcoins when capital flows expand beyond Bitcoin."
Speaking of institutional capital flows, according to CoinShares, over $1.4 billion flowed out of cryptocurrency investment products last week, the highest weekly outflow since March. In this data, we see that the pessimism regarding the Federal Reserve's stance at the beginning of the week seemed to drive the outflows, followed by a recovery after Powell's remarks (mainly in Ethereum products).
Despite a total inflow of $625 million into U.S. ETH ETFs on Thursday and Friday, BTC funds saw an outflow of $217 million over those two days. So far this month, the net inflows for ETH and BTC ETFs are +$2.5 billion and -$1 billion, respectively, "marking a significant shift in investor sentiment towards these two assets," noted James Butterfill from CoinShares.
What signals did investors receive on Friday?
CK Zheng, co-founder of cryptocurrency hedge fund ZX Squared Capital, stated that Powell's shift towards potential rate cuts is "significant" for risk asset classes.
He has set his year-end target for Bitcoin between $125,000 and $150,000. He expects ETH to end the year between $6,000 and $7,000 (hovering around $4,600 on Monday afternoon).
Matt Lason, Chief Investment Officer at Globe 3 Capital, mentioned that any signals of a rate cut confirm the hedge fund's bullish position, as more liquidity is crucial for cryptocurrencies. He anticipates that the strength of the current cryptocurrency bull market will peak in the fourth quarter.
The anticipated rate cut has prompted Globe 3 Capital to shift more of its holdings towards small-cap tokens, "because we are seeing early signs of the long-awaited altcoin season," Lason added.
What should we expect after the fourth quarter? Dan Tapiero, founder of 50T Funds, shared his views on X over the weekend, citing research from Morgan Stanley:
Zheng indicated that he expects Bitcoin's dominance to continue to decline after the signing of the GENIUS Act, estimating that the stablecoin market will grow tenfold in the coming years (from about $270 billion). Coinbase's latest simulations suggest that the stablecoin market cap could reach $1.2 trillion by the end of 2028.
We know that the cryptocurrency market changes rapidly, but I believe these reflections on "our current situation" are worthwhile, even if everything changes in weeks, days, or hours.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
