Bitcoin Retreats Below $117,000 While Altcoins Poised for September Breakout

Bitcoin has retraced below $117,000 after reaching an all-time high last week, signaling a pause in upward momentum and growing caution among investors.

Analysts and researcher at Bitwise, Max Shannon, warns that Bitcoin is exhibiting the classic behaviour of buyer exhaustion sets. This occurs when buy orders no longer enough to absorb selling pressure, paving the way for a sharp correction.

Despite the recent price dip, sentiment in the crypto market has shifted dramatically: the digital asset sentiment index soared from 0.23 to 0.91 in just one week, illustrating swelling optimism even as Bitcoin itself remains under pressure.

But what is this disconnection between the rapidly improving sentiment index and the lukewarm performance of Bitcoin? It turns out that the reason why the digital asset sentiment is increasing is due to the increased interest in altcoins like Ethereum and XRP, which have surged to their highest level in years.

This shift recalls previous cycles, where a weakening of Bitcoin often alludes to an inevitable pivot towards more dynamic crypto assets. History seems to be repeating itself with troubling accuracy.

The recent drop of Bitcoin below $117,000 is a clear depiction of this phenomenon. The fall of Bitcoin also follows the seemingly contradictory statement from the U.S Treasury Secretary Scott Besset.

After initially announcing that the U.S government would no longer be buying additional Bitcoin for the America's strategy Bitcoin reserve, Bessent later backpedaled and clarified that the department will continue to explore budget-neutral ways to buy Bitcoin.

Altcoins Gearing Up for a September Rally

Amid Bitcoin’s lackluster performance, analysts anticipate that September could herald a major resurgence for altcoins.

David Duong, head of research at Coinbase Institutional, forecasts that a large-scale altcoin season could be imminent, a period when at least 75% of the top 50 cryptocurrencies outperform Bitcoin over a three-month span.

The altcoin season index has also ticked up from 33 to 42 in one week. While still short of the 75 mark threshold, the trend points to growing interest in alternatives like Ethereum and stablecoins.

Major financial institutions are escalating their involvement in the sector. Citigroup recently enhanced its strategy by focusing on custody services for stablecoin reserves, a market estimated at $250 billion by McKinsey.

The bank also aimed to directly challenging Coinbase’s dominant position in crypto ETF custody.

Similarly, JPMorgan highlights Ethereum as a prime beneficiary in this evolution. The network now hosts 51% of circulating stablecoins, representing nearly $138 billion, and projects global stablecoin use could reach $500 billion by 2028.

Industry experts remain bullish on altcoins’ prospects. Michaël van de Poppe, founder of MN Trading Capital, predicts the potential for returns of 100% to 150% for altcoins in the coming months if Bitcoin and Ethereum can stabilize.

The current period of weak Bitcoin demand, coinciding with the typically slow trading season of August, may fuel further capital rotation into altcoins as investors chase higher performance.

As the crypto landscape evolves and capital shifts away from Bitcoin in search of fresh opportunities, the coming weeks could prove pivotal for Ethereum, stablecoins, and the broader altcoin market. The contest for digital asset dominance is far from settled.