The cryptocurrency market just lost $107 billion, with Bitcoin dropping to $113,461 and heading toward a key support level at $112,526. This sell-off was driven by the SEC's close examination of Alt5 Sigma's $1.5 billion deal with Trump's World Liberty Financial, causing new uncertainties.

However, analysts suggest that this chaos could pave the way for the anticipated altcoin season in September, as capital flows typically accelerate when Bitcoin stagnates near critical levels.

Cryptocurrency giants like Coinbase and Pantera Capital are predicting that September will be a potential time for an altcoin season. After months of Bitcoin dominance, the market is currently showing signs of readiness for a broader token rally.

Bitcoin Cool Down, Altcoins Ready to Come Back

According to the latest report, for most of the past year, Bitcoin has led the market, first through the ETF frenzy from late 2023 to early 2024, then driven by optimism about Trump's policies until mid-2024. However, altcoins have largely been overlooked.

Pantera emphasized that in previous cycles, altcoins have driven a large portion of growth: 66% during the 2015–2018 period and 55% during the 2018–2021 period. In this cycle, their market share is only at 35%, indicating significant growth potential.

Meanwhile, a typical sign of an altcoin season is Bitcoin losing its dominance, and that has been happening. Coinbase noted that BTC's market share has dropped from 65% in May to below 58% in August. At the same time, the market cap of altcoins has surged 50% to $1.4 trillion. The excitement among retail investors is also evident, with searches for "altcoin" on Google soaring to their highest levels since the early 2018 boom.

Coinbase further emphasized that a record $7.2 trillion in U.S. money market funds could flow back into cryptocurrency as the Fed becomes more accommodative, turning it into a significant source of waiting capital.

David Duong, head of research at Coinbase Institutional, said: "We believe that the current market situation suggests the possibility of a comprehensive shift to an altcoin season as we enter September."

Ethereum Continues to Be the Focus of Institutions

In terms of altcoins, Ethereum remains the top choice for institutions, with companies holding nearly 3 million ETH, accounting for over 2% of the supply. Tokens linked to ETH, such as ARB, OP, ENA, and especially LDO, are witnessing larger price volatility. LDO has increased by 58% this month, thanks to the SEC's view that liquidity staking may not be considered a securities offering.

The tokenization of real assets and the capital flow from institutions are also driving demand, while U.S. legislative momentum from the GENIUS and CLARITY bills is further bolstering credibility. These developments could provide a framework for broader adoption, giving Ethereum and other leading altcoins stronger momentum.