Altcoin Season Gains Momentum as Fed Rate Cut Bets Rise

The cryptocurrency market is buzzing as memecoins and altcoins surge, signaling the start of a potential “alt season.” Bitcoin’s dominance has slipped 3.5% in the past month, underperforming against alternative cryptocurrencies. Altcoin season indexes from CoinMarketCap and CoinGlass now confirm the market is entering altseason territory, where altcoins consistently outperform BTC.

The shift comes as traders anticipate the Federal Reserve cutting interest rates this month. Lower rates typically boost risk appetite by making safer assets like bonds less attractive, driving investors toward higher-yielding alternatives such as crypto. Prediction market Polymarket shows a 92% chance of a 25 basis point cut, while the CME’s FedWatch tool puts odds at 93% for the smaller cut and just 6.6% for a larger 50 bps reduction.

Memecoins are leading the rally, with the CoinDesk Memecoin Index (CDMEME) jumping 7.1% in the past 24 hours, compared to Bitcoin’s modest 0.3% rise. Shiba Inu (SHIB) and its ecosystem token BONE have posted surprising gains, even after Shibarium’s flash loan exploit, underscoring strong retail demand in speculative markets.

Momentum could accelerate further as the U.S. considers approving a wave of altcoin exchange-traded funds (ETFs) later this year. Proposals reportedly include products tied to Dogecoin (DOGE) and even a Trump-themed token. If approved, these ETFs could attract both institutional and retail investors by providing regulated exposure beyond Bitcoin and Ethereum, whose U.S. spot ETFs already hold billions in assets.

With retail traders returning, risk appetite growing, and regulatory doors possibly opening to new altcoin investment vehicles, the stage is set for a heated altcoin season in the months ahead.