According to analysts, investor sentiment towards cryptocurrencies surged this week, with retail interest in altcoins growing, indicating that the recent frenzy phase for Bitcoin may be coming to an end.
According to Max Shannon, a senior researcher at cryptocurrency index fund management company Bitwise, the crypto asset sentiment index rose from 0.23 to 0.91 within a week.
Google search volume for altcoins and Ethereum also reached multi-year highs, reminiscent of previous bear markets, which may suggest that after Bitcoin hit a recent historical high of over $124,000, investor attention towards altcoins and Ethereum (ETH) is increasing.
Shannon stated in a post on X on Thursday that these developments signify "typical bubble behavior, which may indicate buyer exhaustion."
Buyer exhaustion refers to a decrease in buy orders overwhelmed by selling pressure, which could lead to a pullback in Bitcoin (BTC) as funds rotate into other cryptocurrencies.
On Thursday, Bitcoin fell below $118,000 as investors digested comments from U.S. Treasury Secretary Scott Bessent, who stated that the government has no plans for additional purchases for its strategic Bitcoin reserves and independent digital asset reserves.
Bessent later retracted his statement, clarifying that his department is still exploring budget-neutral ways to purchase BTC for the strategic Bitcoin reserves.
Bessent wrote in a post on X on Thursday, "The Treasury is committed to exploring budget-neutral ways to acquire more Bitcoin to expand reserves and fulfill the President's commitment to make the U.S. a 'global Bitcoin superpower.'"
CoinMarketCap data shows that the cryptocurrency fear and greed index shifted from the "greed" to the "neutral" zone, dropping to 59 at the time of publication, down from 68 on Thursday.
Despite falling into the neutral zone, according to Stella Zlatareva, editor at digital asset investment platform Nexo, investor sentiment remains "high but not euphoric, and there is still room for trend continuation if the macro environment does not worsen."
She told Cointelegraph that favorable policy developments, such as the U.S. Securities and Exchange Commission (SEC) upcoming decision deadline on the Solana exchange-traded fund (ETF) in October, indicate that "the broader narrative of an upward trend remains intact."
While a broader cryptocurrency market correction may still occur during the lack of investor activity typical in August, many industry observers expect a rebound in altcoins in September.
David Duong, global research director at Coinbase Institutional, wrote in Thursday's monthly outlook report, "We believe current market conditions now suggest that as we approach September, we may shift into a full altcoin season."
Altcoin season means that at least 75% of the top 50 altcoins by market capitalization have outperformed Bitcoin's price over the past 90 days.
CoinMarketCap data shows that the altcoin season index rose from 33 to 42 over the past week but remains below the 75 level that marks the beginning of altcoin season.
According to Michaël van de Poppe, founder of MN Trading Capital, stable prices for Bitcoin and Ethereum could "provide an excellent window for a significant first rise in altcoins."
The analyst stated in a post on X on Friday, "They are ready to start rising, just like Ethereum. How much room is there for growth? The first round could be 100-150%."
Related: Nansen Analyst: Ethereum (ETH) holders may need to wait longer to see historical highs
Original article: “Analysts believe Bitcoin (BTC) buyer exhaustion, retail turning to altcoins”
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