Bloomberg ETF analyst James Seyffart argues the current market represents an altcoin season through digital asset treasury companies rather than traditional token price rallies, with upcoming ETF approvals unlikely to replicate Bitcoin’s institutional success.
During a Sept. 4 interview with Milk Road, Seyffart said digital asset treasury companies (DATCO) have generated massive returns while individual altcoins remain relatively subdued compared to previous cycles.
He added:
“I think this is the alt season. This has been the alt season. These DATCOs, I mean, they’ve been on absolute fire.”
Further, the SEC’s new framework for cryptocurrency ETFs positions approximately ten assets for immediate approval, including Dogecoin, Chainlink, Stellar, Bitcoin Cash, Avalanche, Litecoin, Shiba Inu, Polkadot, Solana, and Hedera.
Additional tokens, like Cardano and XRP, could qualify within months once futures contracts reach the six-month requirement on CFTC-regulated exchanges.
However, Seyffart tempers expectations for altcoin ETF demand compared to Bitcoin products. He noted:
“Is it going to be the level of interest that a Bitcoin, the Bitcoin ETF launch had? I absolutely not.”
Institutional preference for diversification
Seyffart expects basket products containing multiple cryptocurrencies to attract significantly more institutional capital than individual altcoin ETFs.
Two such products from Grayscale and Bitwise await SEC approval after receiving stay orders following initial technical approval.
Seyffart noted that investment advisors prefer diversification over concentrated positions in individual altcoins. Bitwise’s product holds ten assets while Grayscale’s contains five cryptocurrencies in market cap-weighted allocations.
The framework requires futures contracts to be traded for six months on CFTC-regulated exchanges, with Coinbase Derivatives serving as the primary qualifying platform. This outsources asset selection criteria to CFTC oversight while potentially allowing questionable projects into ETF wrappers.
Seyffart questioned whether traditional altcoin seasons will materialize as institutional money drives cryptocurrency performance. He observed:
“I just don’t see a ton of institutional money coming into the 31st ranked crypto.”
Structural shift
Digital asset treasury companies have absorbed capital that historically flowed into altcoins during bull markets. Strategy’s financial engineering allows investors to gain leveraged cryptocurrency exposure through traditional equity markets rather than direct token purchases.
Seyffart views current market conditions as increasingly institutionalized, with sophisticated players entering crypto markets.
This structural shift may permanently alter altcoin rally patterns as traditional finance channels provide easier access to crypto exposure through regulated products rather than direct token ownership.
Ethereum ETFs demonstrate this dynamic, generating substantial inflows after an initial sluggish performance, but failing to drive widespread momentum in altcoins.
The pattern suggests that institutional preferences favor established assets over speculative alternatives, regardless of the merits of the underlying blockchain technology.
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