The memecoin sector is heating up as fresh altcoin season talks are starting to grow on social media, partly driven by expectations that the Federal Reserve will this coming week cut interest rates, a boon for risk assets.
Bitcoin’s market dominance has dropped 3.5% in the past month, and its underperformance relative to altcoins has now seen altcoin season indexes enter “altseason” territory.
Altseason, short for altcoin season, refers to a period in which alternative cryptocurrencies significantly outperform bitcoin. It often starts as capital rotates out of bitcoin amid growing risk appetite.
Over the last 24 hours bitcoin moved up just 0.3%, while the Memecoin Index rose 7.1%.
Pushing up prices in the Memecoin Index are some tokens like SHIB and BONE, which recently puzzlingly surged after Shiba Inu’s layer-2 network suffered a flash loan exploit.
The growing performance of altcoins stems from a rising risk appetite, as lowering interest rates make safer investments like government bonds less appealing. This renewed risk appetite is fueling a cascading rotation of capital across markets.
Traders on prediction markets now see a 92% chance that the Federal Reserve will cut interest rates by 25 basis points this month, and a 7% chance that the cut will be 50 bps. Odds of a smaller cut are at 93%, while odds of a larger cut are at 6.6%.
Against this backdrop, a wave of altcoin exchange-traded funds (ETFs) is in line to hit U.S. markets in the last quarter of the year if these are approved. These include a DOGE ETF and a TRUMP ETF.
If approved, these ETFs could bring more retail and institutional investors into the altcoin space by offering regulated access to cryptocurrencies beyond BTC and ETH, which have amassed billions in assets.
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