Alt season has yet to arrive
The crypto market is currently caught between two extremes. On one hand, there's the continued dominance of bitcoin, which still overshadows altcoins. On the other hand, we’re seeing institutional investors increasingly turn to ether, through newly launched exchange-traded funds. You can read more about these seemingly contradictory signals in this edition of the Bitvavo Market News.
Market update
The past three years have been a "bitcoin season." Bitcoin's market dominance kept rising, while most altcoins are still trading (well) below their 2021 bull market peaks. In contrast, bitcoin has been sitting more than 50% above its previous all-time high for some time now.
A common way of visualizing bitcoin’s relative performance is through bitcoin dominance. This metric represents the percentage of total market value, within the top 125 cryptocurrencies, that is made up by bitcoin. When bitcoin dominance rises, it means bitcoin is outperforming most altcoins.
The counterpart to bitcoin dominance is altcoin dominance, shown in the chart below. The share of altcoins is in a downward trend, with consistently lower highs and lower lows, and currently sits below its 1-year moving average.
Occasionally, altcoin dominance surges sharply, such as (1) in November 2024 and (2) over the past month. Investors hope that such a spike will turn into a full-fledged “altcoin season,” like (3) in 2021. A key feature of such a season is broad participation across the altcoin market, not just a handful of exceptions.
That’s not the case just yet. A significant portion of the rise in altcoin dominance over the past month is due to ETH’s exceptional performance. According to CoinMarketCap’s Altcoin Season Index, more than half of the top 100 coins have underperformed bitcoin over the past 90 days. If this index rises, so does the likelihood of a true altcoin season.
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Ethereum ETFs break records
Ethereum is back in the spotlight. The U.S. spot ether ETFs have broken record after record in recent weeks. On August 11 alone, more than $1 billion flowed into these funds. And that day was no coincidence—it fell within a record-setting week that saw a staggering $3 billion in net inflows.
Source: CoinGlass
Measured in ether (ETH) itself, the inflows are also historically high. Just like with the bitcoin ETFs, it’s BlackRock leading the charge. Their fund, ETHA, reached the $10 billion mark in assets under management at the end of July, after just 251 days. That makes it the third-fastest ETF ever to hit that milestone. Only two bitcoin funds were faster.
The price of ether surged at the same time. Last week, it briefly touched the $4,700 mark, close to its all-time high from 2021. What’s notable here: trading volumes also soared. That’s important, because high volumes signal that a price move is broadly supported.
Institutional capital as the driving force
The strong inflows point to growing interest from large, professional investors. Retail investors often buy ether directly through an exchange, but major players prefer familiar exchange-traded products like ETFs.
The ETF rally isn’t the only sign of that growing interest. So-called Ethereum treasury companies, such as SharpLink Gaming and BitMine Immersion, have also purchased large amounts of ETH in recent months. Interestingly, they’re not using ETFs to do so. Instead, they prefer to hold their ether on-chain. This gives them the ability to stake directly and earn additional yield.
In short: institutional interest in ether is now coming from multiple directions at once.
In other news
SEC chief Atkins is going all-in on crypto. In an interview with Fox Business, he stated that he is mobilizing his entire agency to make the U.S. the "crypto capital of the world." Project Crypto aims to provide clarity on custody, token classification, and market structure. Atkins called it a historic opportunity to unite innovation and capital markets. His message: Washington wants to dominate the playing field.
America’s Bitcoin reserve is causing confusion. In the morning, Secretary Bessent stated that the U.S. is not purchasing additional bitcoin: only confiscated coins make up the reserve, currently estimated to be worth between $15 and $20 billion. Later on X, however, the tone shifted slightly. So-called “budget-neutral” methods to acquire more bitcoin are reportedly being explored. In short, Washington is looking for creative ways to become the world’s "bitcoin superpower.”
Google causes momentary panic in the crypto world. A new Play Store policy appeared to ban non-custodial wallets by requiring a banking or MiCA license. For many privacy-focused wallets, this seemed like a death sentence. But the backlash prompted Google to respond. The tech giant clarified that the rules only apply to companies that manage customer funds. Non-custodial wallets remain fully permitted.
Citigroup also plans to offer crypto services. Initially, the major bank is focusing on the custody of bitcoin and ether, particularly for companies managing exchange-traded funds. This move positions Citigroup as a competitor to Coinbase, which currently controls 80% of that market. In addition, the bank is exploring the role of stablecoins in speeding up payments, following earlier successful experiments.
Satoshi Radio: The latest episode of Satoshi Radio focuses on a crypto project that unintentionally found itself in the crosshairs last week: Monero. The privacy-focused network appears to be under attack. You'll also be updated on companies with bitcoin reserves, the growth of bitcoin lending, and how Google unintentionally gave the crypto world a scare.
This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it. Bitvavo makes no guarantees regarding the accuracy or completeness of the provided information. Investments involve risks. There is a possibility of losing your entire invested capital.