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- An altcoin season could start in September, fueled by an interest rate cut, passage of the CLARITY Act, and the ETF approval.
- The Altcoin season index has consolidated, mirroring past trends where altcoins either retrace or advance.
Speculations about the arrival of a potential altcoin season have intensified with just a day before the end of July. The Bitcoin (BTC) rally above $123,000 triggered a mini altcoin season this month.
What the Altcoin Season Index Says
The altcoin season index, an indicator that tracks the pace of the altcoin rally, increased to 60% on July 1. The index soon dipped below 50% after BTC fell below $120,000.
This move mirrored previous trends in 2023 and early 2025. The indicator consolidated near 50% for about two months, before either advancing or fully retracing the altcoin run.
If the altcoin season index follows a similar trend, here are three potential catalysts that could fuel the next altcoin rally.
Federal Reserve’s Interest Rate Cuts
As we discussed earlier, the Federal Reserve has maintained interest rates between 4.25% and 4.5% since December 2024. This suggests a cautious approach from the Fed, despite calls from US President Donald Trump to lower rates.
The market currently expects the Fed to leave interest rates unchanged at the July 30 meeting. Most economic data are in solid shape. For instance, the unemployment rate is relatively low at 4.1%, while stocks are at all-time highs.
However, tariffs are likely to continue to feed into higher consumer prices, according to economic forecasters and business surveys. This has complicated the situation for the central bank.
Federal Reserve Chair Jerome Powell earlier stated that the Fed might have already cut rates if not for Trump’s volatile tariff policy. There is currently a 63.6% probability of a 25-basis-point cut in September. This signals a shift in expectations that could impact altcoins and the broader crypto market.
Passage of the CLARITY Act
The passage of the CLARITY Act is another key factor to boost the altcoin and crypto market in general. As noted in our earlier post, the CLARITY Act aims to distinguish between commodities and securities in the crypto sector.
Bitcoin climbed above $120,000 following the passage of the GENIUS Act into law. Thus, the passage of the broader comprehensive market structure bill, the CLARITY Act, could spark rallies for BTC and altcoins.
Lawmakers have set the end of September as the deadline for passing the CLARITY Act. Another thing to note is that the current altcoin season snapshot showed conditions needed for the wave were still intact.
Notably, the ETH/BTC ratio, which tracks ETH relative strength against BTC, remained at recent highs. Additionally, the BTC and USDT dominance retreated lower. This suggests that altcoins recovered modestly, with enough stablecoin liquidity to drive the rally.
Altcoin ETF Approval
The third key factor to fuel an altcoin season in September is the potential approval of an altcoin-based exchange-traded fund (ETF).
As we covered in our latest report, Bitwise filed a related application with the State of Delaware to list a spot NEAR ETF. The asset manager also worked simultaneously to receive approval of multiple altcoins ETFs, including Solana (SOL), XRP, and Dogecoin (DOGE).
Meanwhile, other asset managers, including Grayscale, ProShares, and Franklin Templeton, have also submitted applications to launch SOL and XRP ETFs. Market analysts have forecasted that the SEC could approve an altcoin-based ETF by October 2025.
