In recent discussions about the cryptocurrency market, Bloomberg ETF analyst James Seyffart has emphasized a significant shift in dynamics, suggesting that the current phase is more aligned with an “altcoin season” driven by digital asset treasury companies (DATCO) than a traditional rally in individual altcoin prices. During a September 4 interview with Milk Road, Seyffart pointed out that DATCOs have seen substantial returns, although individual altcoins have remained relatively subdued compared to previous market cycles.
“I think this is the alt season. This has been the alt season. These DATCOs, I mean, they’ve been on absolute fire,” he stated, indicating a thriving environment for these treasury companies amid a backdrop of muted performance for typical altcoins.
The regulatory landscape is also evolving, with the SEC introducing a new framework for cryptocurrency ETFs that could allow for the approval of around ten different assets. Among these are prominent cryptocurrencies such as Dogecoin, Chainlink, Stellar, Bitcoin Cash, and Solana. The framework stipulates that additional tokens like Cardano and XRP could gain qualifying status in the coming months once their futures contracts meet a six-month trading requirement on CFTC-regulated platforms.
Despite this potential influx of new ETF products, Seyffart is cautious about their appeal compared to Bitcoin ETFs, which have dramatically captured institutional interest. “Is it going to be the level of interest that a Bitcoin ETF launch had? I absolutely not,” he remarked, setting a realistic tone about the future demand for altcoin ETFs.
Institutional investors appear to prefer diversified investment strategies over concentrated positions in individual altcoins, as noted by Seyffart. He pointed to two forthcoming basket products from Grayscale and Bitwise, which are vying for SEC approval. Grayscale’s product will include five cryptocurrencies, while Bitwise’s offering will consist of ten, all weighted by market capitalization.
The new ETF framework mandates that futures contracts must be traded for a minimum of six months on approved exchanges, with Coinbase Derivatives being a primary candidate for compliance. However, this opens the door for potentially questionable projects to be included in ETF approvals, as the selection criteria may incorporate oversights.
Seyffart raised concerns about whether we will witness a traditional altcoin season, noting, “I just don’t see a ton of institutional money coming into the 31st ranked crypto.” This skepticism underscores a broader structural shift in the cryptocurrency landscape. Instead of the typical flow of capital into altcoins during bullish trends, significant investments are now funneled into digital asset treasury companies that offer leveraged exposure to cryptocurrencies through conventional equity markets.
As sophisticated institutional players increasingly enter the crypto space, Seyffart believes these structural changes might permanently alter the nature of altcoin rallies. Traditional financial channels now offer easier access to digital assets through regulated products, which contrasts with the historical trend of direct token ownership.
This new framework has already influenced investment patterns, as seen with Ethereum ETFs that, after initial sluggishness, have attracted notable inflows without generating a broader surge in altcoin momentum. Seyffart’s observations reveal a preference among institutions for established assets over speculative alternatives, a trend that doesn’t necessarily hinge on the fundamental strengths of the underlying blockchain technology.
