This article is reprinted with authorization from Coin Market Trader, and the copyright belongs to the original author.
At 2 AM Beijing time on September 18, the Federal Reserve announced a rate cut of 25 basis points as expected, leading to a sharp fluctuation in the crypto market before gradually recovering. Notably, this round of rebound was not led by Bitcoin and Ethereum, but rather by many old altcoins that were at low levels, such as DOT, AVAX, and NEAR. Market reactions indicate that investors have captured a more accommodative policy signal from what seemed to be an expected interest rate decision—the dot plot predicts a cumulative rate cut of 75 basis points within the year, far exceeding the 60 basis points priced in by federal funds futures the previous day. This unexpected easing signal is quickly boosting market risk appetite, driving funds towards high-risk assets.
In addition to improved liquidity, potential valuation recovery expectations, and the simplification of the crypto ETP listing process, favorable conditions are also providing support for the continued fermentation of altcoin markets.
First, according to TradingView data, the current market capitalization share of altcoins (excluding the top ten by market cap) has fallen to its lowest level in nearly five years, hovering around 8% for a long time. The most severe situation is that among the top 100 altcoins by market cap, more than half of the altcoins (considering only the top 100 by market cap) have a circulating market cap that has fallen below their historical 85th percentile level, with prices generally breaking below the historical 95th percentile—overall valuations are even more depressed than when Bitcoin was at $15,500. Extremely suppressed valuation levels often indicate a full release of downside risk, and any marginal positive news can easily trigger fund replenishment. Recently, some altcoins have shown significant resilience at low levels, and the number of open interest (IO) contracts has also shown rapid growth, indicating that funds have begun to quietly position themselves.
Second, on September 17, the U.S. SEC voted to approve a rule change that allows spot commodity exchange-traded products, including digital assets, to apply a unified general listing standard. This move means that spot crypto ETFs can be listed without case-by-case approval, greatly shortening the product listing cycle and cost. According to the new rules, for a cryptocurrency to qualify for spot ETF listing, it must meet one of the following conditions:
The cryptocurrency is traded on member markets of the Intermarket Surveillance Group (ISG), such as the NYSE, NASDAQ, CME, etc.
Its futures contracts have been traded on designated contract markets (DCM) regulated by the Commodity Futures Trading Commission (CFTC) for at least six months, and there is a monitoring sharing agreement in place.
There is already an ETF listed on a national securities exchange in the U.S., and at least 40% of its net assets are invested in that cryptocurrency.
According to the second rule of the new regulations, any cryptocurrency that has completed at least six months of listing on the Coinbase derivatives exchange qualifies for issuing crypto exchange-traded products (ETPs). After the new rules take effect, Bloomberg ETF analysts predict that the market is expected to see over 100 crypto ETFs listed within the next 12 months, which is expected to bring large-scale institutional funds and significant liquidity increments to the altcoin market.
After three unsuccessful attempts to break through $4,800, Ethereum's technical chart has formed a typical triple top structure, further intensifying market concerns about the saying "long periods of consolidation lead to declines." Nevertheless, I still believe that the current weekly-level adjustment of Ethereum is a healthy technical washout, primarily aimed at digesting the massive floating profits generated by the rapid price increase in the short term. The main reasons are as follows:
First, in the past 30 days, despite facing enormous profit-taking pressure, whales holding 10K+ ETH have maintained a net buying position, accumulating an additional 460,000 Ethereum. This indicates that the fluctuations of Ethereum between $4,100 and $4,600 are more about healthy chip turnover rather than major players distributing.
Second, during the process of Ethereum's pullback from $4,750, the scale of open interest (IO) has increased against the trend, indicating that the bullish main force still chose to increase positions against the trend before and after the rate cut. According to the trend and IO's co-movement pattern, the contrary growth in positions often signals that new upward momentum is accumulating.
Beyond real-world assets (RWA) and stablecoins, artificial intelligence (AI) is widely regarded as a key new narrative driving Ethereum's future growth. This trend is not only publicly supported by industry leaders like Vitalik and Tom Lee but is also reflected in the strategic layout of the Ethereum Foundation—its newly established "dAI team" has received $10 million in special funding, dedicated to making Ethereum the core infrastructure of a decentralized AI economy.
Ethereum aims to build a complete on-chain identity verification and collaboration framework for AI Agents by promoting the new ERC-8004 standard. This standard will grant each AI agent a unique and verifiable on-chain identity, forming a global AI Agent identity database, thereby enabling the traceability and assessability of their behavioral trajectories and value creation. On this basis, AI agents will be able to autonomously execute transactions, pay gas fees, and deeply participate in various DeFi applications, thus bringing continuous, scalable, and growing ETH demand to the entire Ethereum network.
On September 17, Google officially released the Agent Payment Protocol V2 (AP2), aimed at establishing a secure and compliant universal transaction language and standard for AI Agents (which can autonomously execute tasks on behalf of users or merchants). AP2 extends the capabilities of the existing Agent2Agent protocol and MCP framework to payment scenarios, with the core goal of solving the trust-building, permission control, and behavior auditing challenges faced by AI agents in e-commerce and multi-level agency transactions, providing standardized infrastructure for automated transactions between AI and commercial entities.
At the same time, Google announced that over 60 partners have joined this ecosystem, including key participants in the crypto field such as Ethereum and EigenCloud (an Ethereum ecosystem project). This collaboration further indicates that the deep integration of AI and blockchain technology is accelerating, and the complementarity between the two in trusted transactions, automated settlements, and decentralized identity verification is expected to jointly shape the foundational protocols of the next generation of smart economies. In this process, Ethereum, with its ecological foundation and forward-looking layout, has taken a leading position in the application exploration of AI and blockchain integration.
Related: Ripple's stablecoin becomes a new withdrawal channel for BlackRock and VanEck's tokenized fund.
Original article: “It’s Time to Increase Altcoin Positions”
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