The crypto market has crossed a technical Rubicon, but the most essential signal hasn't confirmed the rise.
Indicator Total3 , which tracks the market value of all cryptocurrencies except Bitcoin and Ethereum, hit a new high of $800 billion on September 18 - a number not seen in almost eight months.
On the same day, 70% of the altcoins listed on Binance traded above their 200-day moving averages, which hasn't happened since October 2025.
But on September 21, Bitcoin hit $85,000 - its highest level since January.
The recent change in the SEC's regulatory attitude may have truly set the stage for a long-term bull market, given the concomitant strength in Bitcoin and the broader altcoin market.
On September 18, the cryptocurrency market saw a massive jump, gaining around $150 billion in a single session. Among the notable increases, Solana's was over 10%, and Ethereum's was 6%. The dynamics at work in this rally, though, show a more complex story.
For there to be a genuine movement toward alternative cryptocurrencies, or "altseason," these assets must perform comparably better than Bitcoin, not just rise in value along with it.
If such is the case, the data will always show a bleak picture.
The Rotation That Isn’t
On September 20, the Altcoin Season Index reached 41. This index tracks the top 50 altcoins' performance compared to Bitcoin over 90 days. Historically, a period of domination by altcoins has been established at 75. Since peaking at around 67 in August, the index has indeed begun to decline.
There is a constant narrative that Bitcoin's dominance represents.
The number was 59.34% as of September 20, a rise of 0.5% from the previous three days. The dominance of Bitcoin is dwindling as money quickly moves to other cryptocurrencies.
It hasn't happened yet.
While the cryptocurrency market cap technical breakout is noteworthy, the composition of that market is of utmost importance.
During the same session on September 18, the rally caused Bitcoin to increase by 5.9% and Solana by 11%.
Instead of money flowing out of Bitcoin and into altcoins, that pattern of gains across the board suggests a single buyer.
Short liquidations totaling around $170 million happened after Bitcoin crossed the $80,000 threshold; this prompted exchanges to repurchase coins, which in turn elevated all of the index's high-beta assets.
Anticipated shift in mood: the Fear and Greed Index jumped to 72 from 64 the day before, firmly positioned in the "greed" zone.
The third stage of Solana's SIMD-0525 upgrade was a major motivator, as it lowered goal slot times from 300 to 250 ms and improved network speed by about 17%.
As a last step, a decreased float was administered. An asset with a value of $50 billion is more affected by the same amount of purchase orders as one with a value of $1.6 trillion.
Regulation as Background Music
A major shift in the SEC's stance on digital assets since the 2017 DAO Report is reflected in the August 18th unveiling of the Draft Regulation Crypto Assets .
Two tailored offering exemptions are proposed in the bill: one for startups with up to $5 million in funding, which can be used once every four years, and another for $75 million in fundraising, which is modeled after Regulation A.
It also has a conditional safe harbor that lets crypto assets lose their "investment contract" status if the issuer verifies that important management tasks are finished.
A crucial component from a conceptual standpoint is the safe harbor.
It codifies the "separation" theory from the SEC and CFTC's March joint interpretation, which used a five-tiered token taxonomy to label Bitcoin as a digital commodity instead of a security.
The plan was described by SEC Chairman Paul Atkins as an essential change , with Atkins claiming that the prior government "actively hindered capital formation concerning this asset class through regulation by enforcement."
But there's a major flaw in the plan: it doesn't do anything to fix the problem of secondary trading broker-dealer registration or exchange registration.
Any secondary market trades of a crypto asset that is not a security that is included in an investment contract will be treated as securities transactions for as long as the contract is valid.
Without national securities exchange registration, ATS operation, or unilateral determination of the asset's regulatory status, no domestic trading platform can list such assets.
It appears that the proposal fails to address the need for a compliant trading platform in the early stages of token proliferation, even though it removes resale limitations and sidesteps state registration requirements on purpose.
This is an important matter. It implies that issuers' pursuit of long-awaited legislative clarification can be accompanied by an inherent problem with the trading infrastructure.
The Macro Overhang
As rules are being relaxed, the macroeconomic climate is shifting in a way that, according to popular belief, should be bad for risk assets.
Rates were raised for the first time since 2023, when the Federal Reserve raised them by 25 basis points on September 16.
The CLARITY Act , which many in the industry had hoped would pass this year as comprehensive legislation addressing market structure, was unsuccessful in the Senate.
The cryptocurrency market rallied despite the circumstances.
This will be "the strongest and longest-lasting bull market in crypto history," Bitwise's CIO Matt Hougan predicted, claiming that the present cryptocurrency market slump has ended.
Despite the price drop, he highlighted improving fundamentals, including the expansion of blockchain transactions and the involvement of major financial institutions like BlackRock.
Hougan further noted that while money is being redirected to cryptocurrencies, it is leaving investments in artificial intelligence, which had "absorbed all the market's oxygen," behind.
Indeed, that theory might turn out to be correct. But be cautious, because the signs are there.
"This kind of development can shift quickly, so caution remains warranted," warned Darkfost, who detected the Total3 breakout.
Although it is not sufficient to ensure a long-term upward trend in cryptocurrency, the 200-day reclaim is an important component in this process.
What to Watch
Time is of the essence when it comes to confirmation. The first structural break since 2024 would be marked by a weekly close above the two-year trendline that has restricted the altcoin market value.
This would pave the door toward the $400 billion region, which was last encountered in early 2025. If rejected, the index would return to its March activity level, which was between $160 and 190 billion.
Alternative cryptocurrencies must outperform Bitcoin over the 90-day evaluation period for the Altcoin Season Index to confirm a broader change.
This development cannot be sped up by a single day of brief liquidations or any well-intentioned regulation proposal.
After recently examining a slump that began in 2021, the ETH/BTC ratio provides an initial clue, but it is still well below its 2021 peak.
A regulatory framework is already beginning to take form.
There is still no completed market framework that is required for onshore operations. So far, there has been no movement in funds indicative of a season for alternative cryptocurrencies.
Yes, the thaw is happening. Hougan says that the season might be on the horizon. On the other hand, not every single flower in the garden has opened its petals quite yet.
