# Introduction

On July 14, the price of Bitcoin broke through $120,000, setting a new historical high. At the same time, altcoins also experienced a long-awaited wave of rising prices. This market change quickly sparked discussions among investors about the "altcoin season." With the Federal Reserve's interest rate cut expectations rising, macro policies shifting towards easing, and institutional capital continuously flowing into Bitcoin and Ethereum, market risk appetite has clearly increased. However, Bitcoin's dominance remains high, the ETH/BTC ratio has not broken through key resistance, and capital flows show selective diffusion characteristics. Is the current rise in altcoins a true signal of the start of "altcoin season," or just a short-term frenzy driven by capital?

This article will conduct a comprehensive in-depth analysis from multiple dimensions, including macro background and institutional capital layout, capital flow and index analysis, on-chain activity and ecological recovery, market sentiment and heat changes, etc. Through rigorous data interpretation, it aims to help investors clarify the current complex market situation and review and analyze popular and potential sectors, hoping to assist investors in discerning the essence and seizing opportunities and risks in a chaotic market environment.

# Macroeconomic Analysis

1. Macroeconomic Environment Tending Towards Easing

Recently, the global macroeconomic environment continues to tilt towards easing, with favorable factors emerging. First, the Federal Reserve's monetary policy has turned mild: the minutes of the July meeting revealed increasing hawkish-dovish divisions within the Fed, with Waller proposing a rate cut in July and Bowman supporting an early cut, but most officials still prefer to maintain a wait-and-see approach. Federal funds futures indicate a roughly 65% probability of a rate cut in September, a significant increase from previous expectations, while the Fed's own economic forecasts also show a rare hawkish-dovish standoff: 12 officials support a cumulative rate cut of 50 basis points by 2025, while 7 support a cut of 100 basis points. On one hand, the easing capital environment has pushed up the valuations of Bitcoin and crypto assets; on the other hand, persistently high interest rates have made the market more sensitive to the timing of rate cuts. Once the central bank announces dovish signals, the upward momentum of Bitcoin may sharply amplify.

The recent alleviation of global trade frictions has also provided a relatively friendly macro background for the crypto market. In addition, geopolitical risks have eased, and market sensitivity to geopolitical risks is declining. Recently, the U.S. regulatory environment has also sent supportive signals: changes in SEC leadership, the advancement of the stablecoin bill (GENIUS Act), the establishment of Bitcoin strategic reserves, and the White House's release of a digital asset policy blueprint have all reduced regulatory uncertainty and boosted investor confidence.

2. Institutional Capital Continues to Flow In

The continuous influx of institutional capital is a significant driving force behind market prosperity. Overall, institutional investment is gradually expanding from a focus on Bitcoin and Ethereum to other public chain assets. On July 16, Bitcoin spot ETF saw a net inflow of $799.5 million, bringing its asset size to $148.84 billion, marking the 10th consecutive day of net inflows; Ethereum spot ETF recorded a net inflow of $716.63 million, with an asset size of $13.25 billion, marking the 9th consecutive day of net inflows. Although Ethereum's spot price increase since 2025 has lagged behind Bitcoin, institutional capital is accelerating its entry through ETFs. As ETH returns above $3,000, the ETF's water accumulation effect becomes more apparent, further boosting the market sentiment for Ethereum and altcoins.

Source: https://x.com/thepfund

In addition to BTC and ETH, institutional capital is also gradually laying out in public chain sectors outside of Ethereum. Currently, companies like VanEck and Bitwise have submitted applications for Solana spot ETFs to the SEC. Grayscale, the largest crypto asset manager, has established trust products that include a basket of altcoins. On July 15, U.S. asset management company ProShares launched 2x long Solana futures ETF (ticker: SLON) and 2x long XRP futures ETF (UXRP), which were officially listed on NYSE Arca. This reflects that mainstream altcoin assets are gaining more attention and allocation from mainstream investors.

Some listed companies have begun to include crypto assets other than Bitcoin on their balance sheets. On July 15, SharpLink Gaming (NASDAQ: SBET) held 296,508 Ethereum, valued at approximately $999.7 million, surpassing the Ethereum Foundation to become the company with the most ETH holdings globally, dubbed the "MicroStrategy of Ethereum." The number of institutions holding over 100,000 ETH has increased to 7, including: SharpLink Gaming (280,600), Ethereum Foundation (241,500), PulseChain Sac (166,300), Bitmine Immersion (163,100), Coinbase (137,300), Golem Foundation (101,200), and Bit Digital (100,600).

Additionally, "SOL version of MicroStrategy," DeFi Development Corp, has held 640,585 SOL and its equivalent assets, totaling $98.1 million. Starting July 17, SRM Entertainment officially changed its name to Tron Inc, changing its stock code from "SRM" to "TRON." Tron previously announced its listing through a reverse merger and the initiation of a TRX strategic reserve, with SRM having staked all its TRX to earn staking rewards.

# Capital Flow and Index Analysis

1. Bitcoin Dominance

Bitcoin Dominance is an indicator that measures the proportion of Bitcoin's market capitalization relative to the entire crypto market's market capitalization. A peak and subsequent decline in Bitcoin's share is one of the typical signals for the start of "altcoin season." On July 14, when Bitcoin's price broke through the new high of $120,000, Bitcoin dominance showed a downward trend, currently at 62.88%, but still at historically high levels. The sustained high level of Bitcoin dominance indicates that Bitcoin has absorbed a large amount of new capital, while altcoins have not yet received widespread attention. Only when this ratio significantly declines, and capital shifts from Bitcoin to smaller assets, can clear signs of an altcoin season emerge.

Source: https://www.tradingview.com/symbols/BTC.D

2. ETH/BTC Ratio

The ETH/BTC ratio reflects Ethereum's relative performance against Bitcoin and is seen as a leading indicator of capital flow into altcoins. An increase in the ETH/BTC ratio often signals that capital inflow into altcoins may be starting. If this ratio continues to rise, it indicates that more capital is flowing from Bitcoin to Ethereum and other altcoins, providing strong support for an altcoin bull market. Currently, the ETH/BTC ratio is on an upward trend, indicating accelerated capital inflow into Ethereum. The ETH/BTC ratio has rebounded from a low of 0.017 in Q1 to 0.029. Technically, some analysts point out that if the ETH/BTC ratio can effectively break through 0.03, it would mean a shift in market risk appetite from Bitcoin to Ethereum and altcoins, potentially triggering a new round of altcoin activity and fully reviving the altcoin market.

Source: https://www.tradingview.com/symbols/ETHBTC/

3. Altcoin Season Index

The Altcoin Season Index measures whether non-Bitcoin assets (altcoins) have overall outperformed Bitcoin over the past 90 days. According to CoinMarketCap's algorithm, when at least 75% of the top 100 cryptocurrencies (excluding stablecoins) outperform Bitcoin, it is recognized as altcoin season; if only 25% or fewer altcoins outperform Bitcoin, it is considered Bitcoin season. The altcoin season index has recently warmed up again: it had dropped to around 15 in mid-June but began to rebound rapidly in July, rising to 39 this week. This index is calculated based on the number of altcoins outperforming Bitcoin over the past 90 days, and currently, about 40% of mainstream coins are performing better than BTC, indicating that altcoins are becoming more active in the current market.

Source: https://www.coinglass.com/pro/i/alt-coin-season

4. Altcoin Market Share and Trading Volume

According to CoinGecko data, the current total trading volume of the crypto market in the past 24 hours is approximately $243.7 billion, with Bitcoin trading volume accounting for about 21%, Ethereum trading volume about 17.5%, and other tokens accounting for about 61.5%, with trading volume share significantly climbing. This is mainly because, with Ethereum's significant rebound, mainstream altcoins, after continuous declines, are at low levels, coupled with rising narratives, leading to signs of "bottom fishing" in the market. It is important to note that while the relative trading volume of altcoins has increased, it is not a comprehensive rise; rather, capital is selectively rotating between hot themes, and the current capital flow shows characteristics of "actively seeking the next theme and blue-chip" rather than "fully embracing all altcoins."

Source: https://www.coingecko.com/en/global-charts

# On-Chain Activity and Ecological Recovery

1. On-Chain Activity

On-chain activity indicators (such as daily active addresses, daily transaction counts, etc.) reflect network usage and user participation. Data shows that recent on-chain activity has significantly rebounded. Ethereum's gas fee revenue regained the top position in June, while Solana continues to lead the activity rankings, with over 29.7 billion transactions in June (approximately 4.8 million daily active addresses), far exceeding Ethereum and Bitcoin.

As of July 17, 2025, the number of daily active ERC-20 addresses on Ethereum is about 510,000, an increase of approximately 50.8% compared to the same period last year. This significant growth reflects that more users and applications are using the Ethereum network. On the other hand, the DApp ecosystem is also showing active performance, with the daily active wallet count (dUAW) rising to 25 million, a month-on-month increase of 8%. DeFi TVL and NFT transaction volumes surged by 25% and 40%, respectively, further indicating an overall rise in on-chain user activity. These data suggest that both capital and user participation are heating up, providing a foundational environment for the rotation of the altcoin market.

2. DeFi's Total Value Locked (TVL)

DeFi's total value locked (TVL) has rebounded, with Ethereum's 40% surge driving many protocols' TVL to soar, with leading protocols like Aave seeing a month-on-month increase of about 20%; Lido and EigenLayer have also seen fluctuations, but overall locking remains substantial. In the Layer-2 space, Base has rapidly risen, with a total of 292 million transactions in June and approximately 1.71 million daily active addresses. Arbitrum (ARB) and Optimism (OP), as leaders in Ethereum Layer-2, have also continued the recent narrative heat, although ARB has not yet approached its highs from last year, it has received funding support to re-empower DeFi applications. Chainlink (LINK) benefits from the recovery in oracle demand, maintaining a dominant position in the data market. The Aptos (APT) community has seen significant growth in activity, with prices rising to about $5.9, indicating that the DeFi ecosystem is regaining vitality and attracting capital back in.

As of July 17, the total locked value (TVL) in the DeFi market has increased from $89 billion at the beginning of the year to about $132 billion in June, especially innovative projects and new financial protocols have gained capital favor.

Source: https://www.coingecko.com/en/global-charts

# Market Sentiment and Heat Indicators

Market sentiment often indicates the rotation of capital in and out. The Fear & Greed Index is a commonly used indicator to measure overall market sentiment. As of mid-July, market sentiment is notably optimistic, with investor FOMO sentiment accumulating. Since July, the Fear & Greed Index (Crypto Fear & Greed) has continued to rise, climbing to above 70, indicating a "greed" level.

Source: https://www.coinglass.com/pro/i/FearGreedIndex

Compared to the price surge, public attention has not yet significantly increased. Google Trends shows that while Bitcoin's current price has reached a new high, its search popularity is far below the peaks of the bull markets in 2017 and 2021. This suggests that although capital is flooding in, retail investors and the general public's enthusiasm is still in the cultivation stage. Discussions about altcoins on social platforms like X are also relatively flat, with no explosive topics emerging. Overall, there is a clear FOMO atmosphere in the market, but there is also a certain degree of cautious sentiment. Although Google Trends shows that the popularity of Bitcoin keywords has not reached previous highs, the search volume related to altcoins has increased, indicating that retail investors' attention is partially shifting from Bitcoin to more altcoins.

Source: https://trends.google.com/trends/

# Review of Popular and Potential Altcoin Sectors

• Meme: According to CoinGecko data, the total market capitalization of meme coins is approximately $78.9 billion, with an average increase of 25% over the past 7 days. Leading projects include DOGE, SHIB, PEPE, BONK, TRUMP, PUMP, PENGU, etc. On the narrative side, cat and dog-themed and frog-themed meme coins have a broad community base, while emerging memes like TRUMP, PENGU, and USELESS leverage celebrity, NFT/IP associations, and new ecosystem hype through Launchpad. Overall, the meme sector still has a "speculative cycle," but volatility is significant.

• Emerging Layer 1: The Layer 1 sector focuses on scalability upgrades, such as Solana, BNB, Hyperliquid expansion plans, etc., as well as ecological incentives from public chains, such as funding inflows brought by official incentives from Sui, Berachain, Sonic, etc. Overall, the Layer 1 sector's position is solid, leaning towards medium to long-term ecological accumulation.

• Layer 2 Ecosystem: Layer 2 focuses on Ethereum scalability, with leading projects including Mantle, Arbitrum, Polygon, Stacks, Optimism, Immutable X, Starknet, zkSync, etc. Layer 2 benefits from the scalability narrative, with high expectations for ecosystem testing and airdrops. Many projects are upgrading functionality and cross-chain interoperability, such as Arbitrum expanding ecological applications and Optimism launching new network plans. Overall, if the "cross-chain interoperability + airdrop" concept continues to gain traction, this sector will still attract attention in the second half of the year, but caution is needed regarding the risk of overall market saturation for Layer 2.

• LSD/Restaking: With the rebound in ETH prices, the staking and restaking sector continues to heat up. Tokens like LDO, EIGEN, BABY, and ETHFI have recently started to rebound. Protocols in the LSD field are continuously developing new products, with Pendle promoting V2 expansion and exploring traditional financial markets. Overall, LSD/Restaking fundamentally relies on PoS Ethereum, with a solid ecological foundation, and still has capital attraction potential in the second half of the year.

• RWA: RWA has recently gained institutional attention. Major projects include Ondo, Centrifuge (CFG), Goldfinch (GFI), TrueFi (TRU), Maker (MKR), Reserve Rights (RSR), etc. For example, Ondo focuses on the tokenization of government bonds and credit assets, with the total TVL of the U.S. government bond tokenization pool (OUSG/USDY) currently around $1.4 billion. Recently, it partnered with Pantera to launch a $250 million fund to layout RWA projects; Centrifuge is also laying out offline collateral assets. The RWA topic is gradually heating up on social media, with several institutions collaborating with project parties. On the fundamental side, regulatory compliance and off-chain asset yields are driving this sector, with MakerDAO actively launching RWA collateral. Overall, the RWA sector is supported by real assets, offering stable returns and attracting capital; with the advancement of compliance and asset securitization processes, it is expected to continue attracting new funds in the second half of the year.

• AI: The AI sector is active, relying on popular concepts like generative AI and smart contracts. Leading projects include ICP, FET, VIRTUAL, which have recently seen technical rebounds, while the search popularity of "AI Agents" on Google has increased by 320% year-on-year, enhancing the market topic of AI tokens. The global AI wave has driven attention to AI chain tokens, especially when mainstream tech giants lay out crypto AI projects, related tokens often see capital inflows. In summary, the AI sector is strongly driven by macro themes and is a hot investment direction. If AI applications continue to explode in the second half of the year, its representative projects have significant potential for upward momentum.

# Conclusion and Recommendations

In summary, the current crypto market is experiencing the early stage of a transition from Bitcoin dominance to altcoin dominance within a bull market cycle. Easing liquidity, a friendly regulatory environment, and institutional buying provide solid support for the market; the Fear & Greed Index has reached extreme greed, indicating strong optimistic sentiment; the ETH/BTC ratio and ETH price increase significantly lead Bitcoin; most mainstream altcoins have outperformed Bitcoin in the short term; DeFi TVL, stablecoin supply, and on-chain activity are all on the rise. All these suggest that as market sentiment warms and the macro environment improves, the demand for altcoin allocation is accumulating momentum.

However, Bitcoin's market share remains high, and the ETH/BTC ratio has not yet shown significant technical breakthroughs; capital rotation shows selective characteristics of "point-to-point," lacking an atmosphere of all projects flying together. This means that the current market is more likely a "partial altcoin rise" led by large-cap and hot themes, rather than a widespread speculative frenzy. Therefore, from a trend perspective, the current altcoin market is leaning towards the initial stage of substantial initiation.

Looking ahead, if the easing cycle and institutional inflows continue, and the macro environment stabilizes and warms, the overall crypto market is still in an upward channel, and the bull market wave in the second half of the year is likely not over. Various signals from the market dimensions are diverse and positive, indicating the initial signs of "altcoin season." Investors can moderately focus on competitive altcoin assets while closely tracking market trends and key indicators, being wary of withdrawal risks under extreme sentiment. In this transitional period where future trends are not yet fully clear, maintaining flexibility, cautious diversification, and dynamic position adjustments will help seize opportunities and control risks.

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