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The crypto market still moves in familiar cycles, but its dynamics are shifting. Once a niche, it’s now a mainstream financial trend embraced by millions. This marks a significant shift in the current cycle.
Summary
- Crypto still runs in cycles, but the drivers are changing — Bitcoin may set the tone, yet altcoins are starting to move on their own timelines.
- Institutions now dominate the BTC trade, treating it as a macro asset with regulatory clarity, while altcoins lag under fragmented rules and inconsistent approval.
- True “altseason” remains elusive; rotation is happening into ETH, SOL, XRP, BNB, and AI/RWA tokens, but not yet at the sustained scale of past retail‑driven booms.
- Regulatory gaps are creating moats around blue‑chip assets, though ETF approvals for XRP and SOL hint at the coming wave of institutional altcoin exposure.
- The market is becoming multi‑orbital — BTC as the reserve asset, ETH and other leaders driving innovation — and managers will need macro‑aware, sector‑specific strategies to thrive.
Historically, crypto bull runs have been driven by Bitcoin (BTC) price surges, followed by profit-taking and capital rotation into altcoins, a phase popularly known as “Altseason.” This dynamic helped extend the overall duration of previous bull markets.
With institutional embrace soaring and crypto regulatory trends, a completely different shift in market outlook is emerging that is worth spotlighting.
From retail waves to institutional tides
Bitcoin began as a niche financial concept, adopted mainly by retail traders driven by speculation. But today, the landscape has shifted. Former skeptics are now adopters — especially institutions, and with that comes a change in how Bitcoin is perceived. Institutional players now treat BTC less as a peer-to-peer tool and more as a macro asset. Their focus is on custody, regulation, and liquidity, which are key reasons Bitcoin remains their top choice amid thousands of crypto assets.
Since the OCC lifted restrictions on banks’ crypto involvement, major firms like Deutsche Bank, State Street, and Citi have begun exploring custody solutions. While the market has grown beyond Bitcoin, the majority of institutional investors are indecisive about altcoins as a whole. These asset classes currently struggle with fragmented narratives and, until now, an inconsistent regulatory profile. With the past altseason driven by retail holders, whales, or institutions have yet to start exerting pressure on altcoins as compared to BTC.
Unlike Bitcoin, the adoption of altcoins has not picked up with full momentum, despite futuristic Ethereum (ETH) innovations being registered.
Despite the lower capital rotation into altcoins, the decline in Bitcoin dominance shows mild rotation into alternative assets. The Bitcoin dominance has dropped to around 59-61%, coupled with the Altcoin Season Index trending upward, which suggests capital rotation into altcoins like Ethereum, XRP (XRP), Solana (SOL), and Binance coin (BNB), which have posted gains of 20-40% thus far this quarter.
Strong performances from memecoins and sectors like AI and RWAs indicate growing investor interest, but the index remains below the 75% threshold needed for a confirmed altseason. This could be a temporary rotation rather than a sustained trend.
For momentum to sustain into mid-to-late Q3, the market will have to see Bitcoin dominance stay below 60% on a sustained level. To complement this, the funding rates must also be growing without excessive leverage. Continued institutional inflows, regulatory clarity like the GENIUS Act, and strong fundamentals in Layer-1s and DeFi could confirm a full-blown altseason. However, sharp Bitcoin price movements or macroeconomic shifts could disrupt this trajectory, so cautious monitoring of these indicators is essential.
Regulatory clarity is both a blessing and a bottleneck
Despite more than 16 years since the introduction of Bitcoin, the entire digital currency industry does not enjoy uniform crypto regulation across different regions. This has created a major bridge that has shifted the focus to specific assets.
The lack of consistent clarity has effectively created a moat around Bitcoin, Ethereum, and a few other “blue-chip” protocols. Bitcoin is considered a commodity and is outrightly regulated by a number of regulatory agencies around the world.
When it comes to altcoins, regulators like the SEC and ESMA often classify them as securities, imposing stricter requirements on both service providers and investors. This has made Bitcoin a more regulation-friendly choice for institutions. While regulation is essential for industry growth, current rules tend to suppress altcoins — creating a gap that negatively impacts assets beyond Bitcoin.
However, the approval of some altcoin-based ETF products — like the ProShares Ultra XRP Futures ETF (UXRP) and Volatility Shares 2x Solana ETF (SOLT) — has shown that a major tilt to altcoins is imminent. Once Spot Altcoin ETF products are approved, the gap keeping out institutional funds rotation would have been bridged.
The rise of asset-specific cycles
Investors now focus on core value before choosing altcoins, as the industry responds to regulatory gaps with innovation. Ethereum’s smart contracts sparked trends like staking, RWA tokenization, and Layer-2s. Today, sectors are growing independently, decoupling from the traditional Bitcoin-led cycle.
When it comes to innovations, the Ethereum ecosystem takes the lead. From its consistent upgrades to the introduction of staking following its transition to the proof-of-stake (PoS) model, it has set the coin apart. For this, ETH has created an independent cycle for itself, making it appealing to investors.
Meanwhile, RWA is shaping the future of finance as Wall Street is heavily moving toward tokenization. From BlackRock’s BUIDL to Franklin Templeton’s BENJI, the shift in focus is now tied to protocols that can power this shift.
L2 networks generally provide a more sustainable infrastructure that corrects the loopholes in their parent chain. With faster speed, lower transaction cost, and better composability, L2 protocols play a crucial role in institutional digital asset management.
Altcoins with a direct leaning to these innovations are now more likely to draw attention from institutional investors, as compared to memecoin-driven mania.
Largely, firms like BlackRock and Bitwise are already showing the altcoins they lean more toward. With big capital flow into Ethereum, Solana, and XRP, some altcoins are already defining the pace of adoption across the board. Aptos and SEI are also being embraced for their unique tech design, focusing on speed and EVM scalability, which is pushing them into the spotlight.
The list of backed altcoins may be limited, but capital is rotating to those considered highly important per their value propositions.
The new market is multi-orbital
Crypto has evolved beyond what most people knew just years ago. While Bitcoin still appeals to traditional investors, altcoin-driven innovation can’t be ignored. Today’s multi-orbital market spans diverse sectors, requiring asset managers to align strategies across them for better results.
Asset managers will get the most out of the industry if they adopt a macro-aware portfolio. These strategies generally consist of assets that track inflation, interest rates, and offer better insulation against geopolitical shocks using their crypto fundamentals.
Risk-averse asset managers may prefer a thematic altcoin portfolio — spanning modular chains, stablecoin issuers, and AI tokens. In a fast-evolving market, ongoing research and compliance are key to protecting institutional investors more than retail participants.
In conclusion, the industry is gradually growing beyond a Bitcoin-driven bullish market cycle. Altcoins are defining their own pace, and while BTC’s dominance is not fading, it is obvious that it does not determine how and when alternative assets can chart an uptrend.
