- Fed rate cuts could drive investors to riskier investments like altcoins.
- The altcoin season metric spiked following the cuts.
- Solana leads the top 10 cryptos, jumping 9% today as Bitcoin rises stall.
The Federal Reserve’s decision to slash interest rates by half a percentage point will kick off a new altcoin season, according to Presto Research analysts Peter Chung and Min Jung.
In a research note on Friday, they argued that while cryptocurrencies that aren’t Bitcoin have had a “lacklustre” start of 2025, that might be about to change.
The start “of the Fed’s rate-cut cycle may usher in the long-awaited altcoin season,” they said.
They explained that altcoin growth has been held back due to higher yields in traditional finance, which have drawn investor attention away from riskier crypto assets like altcoins.
However, they added that “on-chain yields [could become] more appealing by comparison, potentially sparking a rebound and breathing life into the altcoin space.”
The US Federal Reserve’s decision to cut rates by 0.5% on Wednesday sent crypto and equity markets soaring.
As interest rates come down, investors tend to shift towards riskier assets, including altcoins, which have underperformed in recent months.
Fed Chair Jerome Powell cited improvements in macroeconomic conditions as the reason behind the cuts.
Altcoin season
Data also backs up the analysts’ sentiment.
The Blockchain Center’s Altcoin Season Index metric shows that crypto markets are nearly at the halfway point between Bitcoin and altcoin so-called seasons.
This metric signals an “altcoin season,” when 75% of the top 50 cryptocurrencies outperform Bitcoin over the past 90 days.
The last time the market moved into altcoin season territory was in January.
Solana has been the biggest mover in the past 24 hours among the top 10 cryptocurrencies, jumping by more than 9%.
This could partly be attributed to Solana’s annual conference, which kicked off this week.
Meanwhile, Bitcoin has only managed a 1.5% gain in the same time frame.
