Fed Rate Cut Expectations Drive Cryptocurrency Market as Altseason Indicators Peak

TLDR

• Altseason indicators hit highest levels of 2025, reaching 76 out of 100
• Total altcoin market cap nears all-time high at $1.63 trillion
• Prediction markets show 15-16% chance of aggressive 50 bps Fed rate cut on September 17
• Bitcoin trades above $113,750 while total crypto market cap reaches $3.88 trillion
• Dogecoin, Avalanche, and other altcoins showing strong daily performance

The cryptocurrency market is showing strong signs of an emerging “altseason” as multiple indicators reach their highest levels this year, coinciding with growing expectations for a Federal Reserve interest rate cut next week.

Data from multiple tracking services confirms the altcoin market’s momentum. The Blockchain Center and CoinGlass altcoin season indexes both show scores of 76 out of 100, while CoinMarketCap’s indicator stands at 67. These are the highest readings since December.

The technical definition of an altseason is when 75% of the top 50 crypto assets outperform Bitcoin over a 90-day period. This pattern typically emerges during bull markets when smaller cryptocurrencies experience rapid price growth compared to Bitcoin.

Financial data provides further evidence of altcoin strength. The total altcoin market capitalization excluding Bitcoin and stablecoins has reached $1.63 trillion, approaching its November 2024 high of $1.64 trillion and nearing the all-time high of $1.7 trillion set in November 2021.

Fed Rate Cut Expectations

Market attention is now focused on the Federal Reserve’s upcoming meeting on September 17. Prediction markets have recently begun pricing in the possibility of a more aggressive rate cut than previously expected.

The CME Group’s FedWatch tool now shows a nearly 10% chance for a 50 basis point rate cut, which would lower the target rate to 375-400 basis points. This possibility wasn’t considered viable before September 5.

Other prediction markets show even stronger expectations. Kalshi traders are pricing a 16% chance of a cut larger than 25 basis points, with over $41 million in trading volume. Polymarket shows similar odds at 15.3%, with an even larger $91 million in accumulated bets.

Rate cuts typically benefit risk assets like cryptocurrencies by redirecting capital from treasury bonds to higher-risk, potentially higher-reward investments. The Federal Reserve has been hesitant to cut rates since its last reduction in December 2024.

Recent economic data may be influencing these changing expectations. Producer Price Index (PPI) data came in at 2.6%, lower than both the previous and expected 3.3%. This, combined with recent jobs reports, has shifted market sentiment toward expecting more aggressive monetary easing.

Market Performance

Bitcoin is currently trading above $113,750, representing a 2% gain from its September 8 closing price of $111,500. The total cryptocurrency market capitalization stands at $3.88 trillion, up 1.5% from the previous day’s close.

Market observers have noted an interesting trend in recent price action. While Bitcoin has historically driven the overall crypto market index, there are signs of decoupling as Bitcoin’s market dominance decreases and altcoins gain market share.

Several altcoins have shown strong performance over the past 24 hours. Dogecoin has added more than 5% to reach $0.25, while Avalanche has surged almost 11% to $29, its highest level since January.

Other top performers include Hyperliquid (HYPE), Stellar, Litecoin, and Toncoin, all gaining more than 3% each. These gains further support the altseason narrative.

Crypto trader Daan Crypto Trades observed that the total altcoin market capitalization is approaching its 2021 all-time high. He suggested that once altcoins enter price discovery mode, it could trigger wider market excitement and attract new participants.

Another market indicator supporting potential rate cuts was an unusual 2 billion USDT mint by Tether, similar to what occurred in December 2024 during the last rate cut.

The cryptocurrency market will likely remain focused on the Federal Reserve’s upcoming decision, with any rate cut potentially providing further fuel for both Bitcoin and altcoin price action in the coming weeks.

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