The number of compliant products continues to increase, but the funds are still circling around the top assets, indicating that the old cycle script is losing effectiveness.

Written by: Oluwapelumi Adejumo

Translated by: Saoirse, Foresight News

On September 9th, U.S. exchange-traded funds tracking Ethereum, XRP, and Solana garnered nearly $59 million, while Bitcoin-related products saw an outflow of $120.24 million. This phenomenon once again reflects the shifting of funds among different compliant crypto assets.

However, the overall market performance hardly shows this rotation effect. The altcoin season index reported by BlockchainCenter stands at 37, far below the critical value of 75; reaching this threshold means that three-quarters of the qualified tokens in the top 50 by market cap outperformed Bitcoin over the past 90 days.

This differentiation is becoming a typical feature of the ever-expanding crypto ETF market. Investors now have more channels to allocate assets outside of Bitcoin, but funds remain concentrated in a few top assets, without spreading into the broader token market.

Fund Rotation on Wall Street Limited to a Narrow Core Circle of ETFs

The market performance on September 9th illustrates: institutional-level altcoin trading can reach a scale, but it may not evolve into a broad market rise.

Ethereum ETF saw net inflows of $34.75 million, XRP products attracted $12.29 million, and Solana brought in $11.73 million; meanwhile, Bitcoin ETF faced redemptions for the second consecutive trading day.

The data above cannot prove that investors redeemed Bitcoin ETFs and immediately bought into the other three cryptocurrencies. However, it is sufficient to indicate that market demand for top compliant crypto assets is showing a reverse trend.

Open ETFs do not equal altcoin season; even with compliant ETF channels for Bitcoin, Ethereum, and Solana, it is still possible to have a scenario where Bitcoin dominates while most altcoins perform poorly.

This pattern is not an isolated incident.

In the 30 days leading up to September 9th, Bitcoin ETF continued to lead with net inflows of $3.42 billion; Ethereum attracted $1.76 billion; Solana and XRP recorded net inflows of $200.88 million and $185.32 million, respectively.

According to SoSoValue's statistics on currently listed spot crypto ETFs, the total net inflow over 30 days was $5.64 billion, with Bitcoin, Ethereum, XRP, and Solana together accounting for $5.57 billion.

Other products trailing behind received only a small fraction of the funds.

US Cryptocurrency ETF Landscape (Source: SoSoValue)

During the same period, Hyperliquid fund saw inflows of $54.77 million, Chainlink saw $19.21 million; Hedera saw $2.54 million, Avalanche saw $1.30 million. Dogecoin, Litecoin, and BNB experienced small net outflows, while Polkadot (DOT) had zero net inflow.

In terms of assets under management, the disparity is even more pronounced. Bitcoin ETF has $99.33 billion under management, Ethereum ETF has $15.69 billion; XRP and Solana each have about $1.5 billion.

Following closely, Hyperliquid has a scale of about $464 million, Chainlink less than $182 million, and all other currently listed products have management scales below $60 million.

This hierarchical structure allows investors to shift allocations from Bitcoin to other compliant targets without the need to further engage in the broader cryptocurrency market.

In past market cycles, traders commonly expected: The gains from Bitcoin would first translate to Ethereum, then to large-cap altcoins, and finally spread to various small-cap speculative tokens. However, ETFs have opened a new path: institutional portfolios only adjust their positions internally within Bitcoin, Ethereum, XRP, and Solana, while the vast majority of the token market remains unaffected.

To Welcome Altcoin Season, Funds Need to Further Spread Outward

Overall market data shows that this outward transmission of momentum has yet to occur.

BlockchainCenter defines altcoin season as: within a 90-day period, among the top 50 qualified cryptocurrencies by market cap, 75% outperform Bitcoin. On September 9th, this index read 37, indicating that the qualifying tokens are not even half of the target number.

Data from CoinGecko shows that Bitcoin currently accounts for 56.64% of the total crypto market cap; compared to 56.02% three months ago and 56.54% a year ago, the overall change is negligible. Even with more and more altcoins launching compliant ETF products, Bitcoin's market share remains stable.

Thus, distinguishing between "internal altcoin rotation within ETFs" and "true altcoin season" becomes crucial.

Ethereum, XRP, and Solana can attract inflows in the hundreds of millions, but it is challenging to drive tokens like Dogecoin, Avalanche, and Polkadot, which have weaker ties to institutional allocation logic.

Even though the number of approved ETF products is increasing, it does not mean that funds will naturally transmit outward. On September 9th, despite Bitcoin experiencing outflows and the top three altcoins attracting funds, Hedera, Avalanche, Dogecoin, Polkadot, Litecoin, and BNB all recorded zero net inflow corresponding to their ETFs.

For fund issuers, the core challenge now is no longer packaging new tokens into ETFs, but rather convincing institutions to break away from a limited number of preferred assets and allocate more to other assets.

The continued redemptions of Bitcoin ETFs could be the best scenario for a pressure test. If ETH, XRP, and Solana continue to absorb outflows while small and medium-sized coin ETFs remain deserted, then Wall Street may frequently see localized altcoin rotations, but it will be challenging to welcome the broad altcoin season that traders long for.