Altcoin traders can hardly contain themselves as the long-awaited breakout appears to have begun. ETH posted gains of over 20% the last seven days and smaller cap coins like SOL, DOGE, and BNB are close behind, with Chainlink’s LINK token up 30% in the same timeframe. Does this mean alt season finally here?

A painful bull market for altcoin traders

2025 has been a stellar year for Bitcoin, seeing the number-one crypto climb steadily higher, marking a fresh all-time high of ~$122,838 on July 14, fueled by rising institutional demand and a favorable regulatory climate stateside.

The same cannot be said of altcoins, which have languished far from their peak levels. Ethereum’s lackluster performance, in particular, caused divisions within its community, leading many to question whether the divergence between technology and price was an existential issue.

Just as ETH price was beginning to break out and see sustained momentum, renowned trader and former BitMEX CEO Arthur Hayes rattled ETH holders, selling 2,373 coins from his stash and forecasting near-term headwinds for the number-one alt, which, he believed, would test the $3,000 mark based on a weaker-than-expected jobs report and a short-term slowdown in global liquidity.

Those who continued to HODL their ETH are feeling euphoric today as ETH price has surged more than 50% in a month, with some prediction platforms forecasting price targets over $60,000. Even Hayes has taken to crypto Twitter this morning to admit the folly of his decision, tagging Tommy Lee’s Fundstrat, now the largest holder of ETH, with the words:

“Had to buy it all back, do you forgive me? I pinky swear, I’ll never take profit again.”

Is alt season finally here?

With Hayes back on board, BTC and crypto allowed in 401ks, and Ethereum bulls from Buterin to Bankless, finally believing in the strength of this latest rally, does this mean that the long-awaited alt season is finally here?

It certainly looks that way as smaller-cap coins begin to pump across the board. Before you get over your skis, however, take note: this year’s alt season may differ from previous cycles. As prominent day trader and LINK ambassador Ito Shimotsuma, points out:

“Each #Altseason is smaller than the previous ones. And this is why I tell you to focus more on DYOR. In 2017, any random ICO pumped 100x. In 2021, any VC backed alt pumped 50x-100x. This time, very selective alts will outperform. Look for those alts with strong narrative and revenue sharing.”

Another well-known altcoin trader, Miles Deutscher, similarly exercises more caution, confirming that, in his opinion, a mini alt season is finally happening, but watch out for the rotation back into BTC between the $120-140K mark.

Into the Cryptoverse founder Benjamin Cowen is notably less bullish on alts, warning:

“This is not alt season.

This is ETH season

Let’s not confuse the two”

Is Bitcoin’s rally finally over?

With Ethereum and alts pumping, Bitcoin is currently being outperformed, and Bitcoin dominance has dropped to 59.2% at the time of writing after months of holding steady over 60%.

According to Bitcoin macro strategy analyst ecoinometrics, Bitcoin’s correlation with the Nasdaq is behind this recent stall.

“Bitcoin’s correlation with the Nasdaq helps explain recent price action.

When stocks dropped sharply late last week, Bitcoin followed. That’s what you expect when correlations are elevated.

Now that the Nasdaq is resuming its uptrend, Bitcoin is moving with it again.”

All eyes will be on the broader macro picture moving into next week to see what Bitcoin’s next move will be, and how long this alt season may last.

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The US Marshals Service (USMS) appears to hold just under 29,000 Bitcoin, far lower than the more than 200,000 BTC many believed the government had in custody.

The updated figure, confirmed via a Freedom of Information Act (FOIA) request by independent crypto journalist L0la L33tz on July 16, puts the government’s total at 28,988 BTC as of March 2025.

At current prices, that stash is worth roughly $3.4 billion. That starkly contrasts with the $23.5 billion estimate from blockchain analytics platforms like Arkham Intelligence and Bitcoin Treasuries.

The discrepancy has ignited speculation across the crypto space, with some observers questioning whether the US has been quietly selling its Bitcoin holdings.

[Editor’s Note: Given that President Trump announced that seized Bitcoin would become part of a Strategic Bitcoin Reserve earlier this year, it is also possible that the Bitcoin is simply no longer under US Marshals custody. However, who controls the keys for the Bitcoin tracked onchain remains unclear.]

Is the US selling its Bitcoin?

Bitcoin Magazine CEO David Bailey suggested the US likely sold significant portions of its BTC reserves before President Donald Trump’s swearing-in in January. He noted that the lack of visible on-chain activity may not prove anything due to custodial involvement.

He stated:

“I think it is conclusive they’ve been selling without creating onchain footprint.”

Bitcoin analyst Sani, who tracks addresses suspected to be linked to US government wallets, confirmed no recent transactions from those addresses.

However, he pointed out that if custodians like Coinbase were facilitating off-chain swaps, traditional blockchain tracking may no longer clarify government activity.

Sani added:

“If that’s truly what’s happening, then all the on-chain tracking we’ve been doing, mine included, might not matter anymore.”

Senator Cynthia Lummis, a vocal advocate for a national Bitcoin reserve, responded with concern to this development. She said:

“If true, this is a total strategic blunder and sets the United States back years in the bitcoin race.”

Seized vs. forfeited Bitcoin

L33tz clarified that the FOIA request only covered “forfeited” Bitcoin assets legally transferred to government ownership.

According to her, many seized assets, such as those tied to ongoing investigations or hacks like Bitfinex, are not yet government property and may reside with other federal agencies like the DEA or FBI.

She emphasized that platforms like Arkham may misrepresent totals by lumping together seized and forfeited coins. L33tz pointed out:

“For example, Arkham lists 94k BTC from the Bitfinex hack, but forfeiture in the Bitfinex case hasnt been decided, at least last time I checked.”

Blockchain security expert Taylor Monahan also offered further explanation, pointing out that legal custody does not equal ownership.

She noted that in many cases, seized coins remain victims’ property and will never become US government assets.

Monahan highlighted ongoing legal processes, ranging from civil forfeiture to IEEPA, determining the fate of seized property.

She cited several examples, including a case where the FBI currently holds $40 million in crypto linked to an August 2024 theft, but these coins are expected to be returned to the rightful owner under the terms of a plea agreement.

Considering this, Monhan stated:

“Most of the time the coins seized by USG do not become property of the USG. They are returned to the victim that was hacked or defrauded.”

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Ethereum’s price trajectory has taken a sharp downturn, with technical analysis showing a possible crash to $2,000. Crypto analyst SwallowAcademy pointed out on the TradingView platform that some bearish signals are forming in smaller timeframes, especially as buyers have failed to maintain a key support zone at $2,700. Notably, the broader market downturn over the past 24 hours has only strengthened the case for further declines for Ethereum.

Ethereum Plunges Over 12% In 24 Hours As Market Suffers Steep Losses

The crypto market has taken a heavy hit, with Bitcoin falling below major support at $90,000 and shedding 6.9% over the past 24 hours. An already struggling Ethereum has fared even worse, with its price plunging 12.6% in the same timeframe. Particularly, Ethereum broke below support levels at $2,600, $2,500, and $2,400 in quick succession. 

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This steep decline has aligned with SwallowAcademy’s warning about Ethereum’s weakness on smaller timeframes, further lending weight to the possibility of a more profound drop to $2,000. SwallowAcademy had initially emphasized that Ethereum remained in a solid buying zone due to the presence of EMAs at the $2,700 support. However, with price action shifting, the analyst acknowledges that bearish pressure on lower timeframes could open the door for further declines.

Interestingly, this Ethereum price crash in the past 24 hours came as a surprise, as bulls managed to hold above a key support level of $2,700 despite the fiasco of Bybit’s $1.5 billion hack that took place throughout the weekend. 

Although the immediate fallout from the exchange’s hack appeared contained, the market now seems to be experiencing a delayed reaction, and fear is gradually setting in among investors. This growing uncertainty, combined with persistent outflows from crypto investment products, including Spot Bitcoin and Spot Ethereum funds, has added more downward pressure on Ethereum’s price.

As it stands, the current Ethereum daily candle is firmly in the hands of sellers, with no signs of easing pressure. This is a significant change from the previously strong buying sentiment.

Bearish Momentum Could Extend To $2,000

The weakening weekly candle has tipped the scales towards more declines than a bullish uptrend, though it is still early in the week to decide. cautions that it is still early in the week. Ethereum is already trading below the EMAs in the daily timeframe, so the crucial factor is whether it can hold above the EMAs in the weekly timeframe. 

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If the current selling momentum continues and the price breaks below $2,200, the next major downside target is $2,000 before any notable bounce can occur. 

At the time of writing, Ethereum is trading at $2,395 and is at the risk of more declines over the next 24 hours. Despite the sharp drop, the RSI has yet to reach oversold conditions, which means that sellers may still have room to push prices lower before exhaustion sets in.

Featured image from Adobe Stock, chart from Tradingview.com