Markets prepare for altcoin break out as XRP, BNB, HYPE rally ahead of Fed decision

XRP, BNB, SUI, and Hyperliquid have outperformed other altcoins ahead of Wednesday’s expected U.S. Federal Reserve interest rate decision. BNB has surged by 2.56% to $955.10, while SUI, Hyperliquid, and XRP are up 2.64%, 3%, and 1.49%, respectively.

Investment analyst at Fischer8 Capital, Lai Yuen, argued that those digital assets are pumping due to coin-specific developments and the anticipated central bank’s rate cut decision on September 17. He noted that Hyperliquid and BNB are rising due to their digital asset treasury initiatives, in addition to their solid businesses and clear accumulation models.

Digital assets see increased inflows 

The analyst also believes that the surge in XRP is fueled by the newly approved spot ETF, which is expected to launch on Friday. Cryptopolitan reported that the REX-Osprey XRP ETF will be the first U.S. fund to provide investors direct access to XRP.

On-chain data shows that Layer 1s have outperformed other sectors like Layer 2s, memecoins, or gaming over the past seven days and thirty days. The S&P 500 index is up 2.44%, while gold surged by more than 10% in the last thirty days. Yuen noted a strong inflow into equities and gold heading into the FOMC, while digital assets continue to lag, with majors capped by lower highs.

On-chain data still shows that on Tuesday, crypto broker FalconX withdrew 413,075 SOL from Binance, OKX, Coinbase, and Bybit. Yuen believes it signals accumulation from larger players as they seek to reduce their stockpiles on exchanges to sell quickly.

U.S. Bitcoin spot ETFs also recorded $292 million in net inflows on September 16, with BlackRock’s iShares Bitcoin Trust (IBIT) pulling in $209 million. The strong inflows came in anticipation of the Fed’s monetary policy decision, suggesting that investors increase their exposure to Bitcoin through ETFs to hedge against potential macroeconomic shifts.

A lower interest rate environment could draw fresh capital into the stock market and crypto, leading to inflows into high-risk assets like altcoins. Coinbase’s Institutional global head of research, David Duong, mentioned last month that the current market conditions suggest a potential shift toward a full-scale altcoin season in September.

Altcoin season nears as Bitcoin dominance declines

Duong argued that altcoin season was already in the early stages, pointing to Bitcoin’s declining market dominance. At the time of publication, Bitcoin’s market dominance is 58.32%. He also believes that the catalyst will likely push altseason into full swing in the expected Fed rate cuts on Wednesday.

Coinanalyze data also shows that speculation around altcoins reached new highs, as the recent surge in Altcoin Open Interest briefly overtook Bitcoin’s on Saturday. Vtrader founder Stephen Gregory previously mentioned that the rise in leverage indicates investors’ eagerness for the alt season ahead of Q4’s historically bullish performance.

CoinGlass and CoinMarketCap altcoin season index show a score of 76 and 65 out of 100, respectively, indicating that they’re at their highest levels since December. Blockchain Center data also shows the metric sits at 80% in the last 90 days, with only 75% of the top 50 crypto assets required to signal altcoin season. 

Analyst at CryptoQuant, Maartum, noted that altcoins have the upper hand as they gain volume dominance. He revealed that altcoins make up 85.2% of total futures trading volume. The analyst also stated that altcoin speculation is surging as the gap between BTC and Altcoin Open Interest recently hit a new high.

According to CoinMarketCap data, Bitcoin has increased more than 4% in the past 7 days and nearly 1.5% in the past 30 days. At the time of publication, BTC is trading at $116,762. On-chain data also shows that the digital asset has surged 99% yearly despite a shift in altcoin dominance.

If you're reading this, you’re already ahead. Stay there with our newsletter.