New version of “Altcoin Season”: Farewell to general rise, narratives such as ETFs, real returns and institutional adoption will trigger a “selective bull market”

Original text: arndxt

Compiled by: Yuliya, PANews

In the current context of generally depressed market sentiment and unclear direction, the author of this article puts forward a bold and critical conclusion about the altcoin market: "We may be in the last quiet period before the next round of "altcoin season" breaks out." Unlike the general rise in the market, the future market will be driven by core narratives such as ETFs, real returns and institutional adoption. The following is the original text of the article, which was compiled by PANews.

We may be at a critical turning point - the most grueling period in the market cycle, when 99% of market participants choose to wait out the day due to exhaustion or indecision, and only the 1% quietly completes the trading layout that will affect their lives.

The signal of copycat season has appeared

Just last week, Bitcoin hit its highest monthly closing price in history, but its market dominance began to decline. At the same time, whales quietly absorbed more than 1 million ETH, or about $3 billion, in a single day, and the balance of Bitcoin on exchanges has dropped to a multi-year low.

Retail investors are still on the sidelines and skeptical. Sentiment indicators are low - this is exactly the ideal market state for early entry.

Everything began to brew at this moment.

The current altcoin speculation index is still below 20%, and the ETH/BTC pair has finally recorded its first weekly positive line in many weeks. The approval of the Solana ETF is a foregone conclusion. The rotation of on-chain capital has quietly begun, and funds are subtly flowing to areas such as DeFi, real world assets (RWA) and restaking that are consistent with the market narrative.

But this is not 2021, and that kind of "everyone takes off" situation will not reappear.

The next market will be more selective and deeply driven by narratives. Capital is flowing into real returns, cross-chain abstract infrastructure, and ETF structured assets with pledge income mechanisms.

If you have been accumulating silently, this is your signal.

Profound changes in the DeFi field

We are witnessing DeFi moving towards a more institutionalized and invisible stage. On the one hand, financial primitives designed for institutions, such as re-hypothecation bonds, fixed-rate auto-renewable credit, and stablecoin revolving vaults, are booming. On the other hand, composability layers like Enso and Dynamic are simplifying operational complexity for ordinary users.

But in the end, only those protocols that go beyond the "points game" and integrate real economic value or use cases will continue to attract capital inflows. Behind this, the real winners will be those protocols that can perfectly combine seamless cross-chain user experience (UX), secure infrastructure, and predictable, real-world-like investment returns.

Here are six major trends happening in the DeFi space:

1. Stablecoin yield optimization and fixed-income DeFi

DeFi is increasingly mimicking traditional finance, attracting funds by converting stablecoins into high-yield, fixed-income-like assets. Against the backdrop of increased volatility in the spot market, protocols are shifting their focus to capital efficiency and fixed-rate structures to meet the dual needs of institutions and retail investors.

Euler Finance: This super lending application deployed on Arbitrum provides a lending market for blue-chip assets such as ARB, WETH, USDC, WBTC, and attracts liquidity through the rEUL reward mechanism.
Yield Nest: With stablecoins as the core, it launches a new asset $ynUSDx, using the Superform platform and a strategy based on SuperUSDC to maximize stablecoin returns.
Size Credit: Innovatively allows users to recycle fixed-income principal tokens in exchange for lower-cost USDC, thereby attempting to obtain double-digit annualized returns on idle capital.
Renzo Protocol: Meanwhile, in terms of re-staking, Renzo has launched a fixed-term "zero-interest re-staking bond", which provides predictable cash flow for active verification services (AVS) while bringing bond-like fixed income exposure to liquidity providers. This structure may become the cornerstone of fixed income in the EigenLayer security market.

However, it should be noted that the high returns (15%+) in publicity usually require leverage, re-staking or looping strategies. After deducting fees, slippage and risk drag, the actual net return rate may be closer to 6-9%. In addition, while the composability that supports these loop structures provides convenience, it also increases the systemic risk of chain liquidation and stablecoin decoupling.

2. Integration of cross-chain liquidity and user experience

The way users interact with multi-chain liquidity is undergoing a fundamental shift. The cross-chain user experience is evolving from a cumbersome bridging process to a seamless, intent-based deposit system, where the boundaries between chains are effectively abstracted.

GHO: The deployment on Avalanche (its first deployment outside of Ethereum) demonstrates the development trend of native cross-chain stablecoin utility.
Enso: The embedded cross-chain DeFi deposit component launched by Enso represents a generational leap in user experience. Built on LayerZero and Stargate, this component allows users to complete bridging, exchange, and strategy deployment with one click. Projects such as Pume Network and Yield have integrated this component to drive funds into their vaults.
T1 Protocol's Proof of Read system is also promoting a real-time cross-chain verification mechanism. Relying on the TEE (Trusted Execution Environment) infrastructure, it provides high-speed cross-chain verification between Arbitrum and Base without the need for multiple signatures, effectively improving bridging efficiency and trust assumptions.
Wormhole’s new collaboration with Ripple to enable cross-chain messaging on the XRP Ledger further demonstrates that the war between chains will not disappear, but user experience is gradually being integrated.

The trend is clear: value capture is gradually shifting upward from the L1 public chain itself to those composable infrastructure and messaging layers.

3. Re-staking and on-chain security market

Re-staking is continuing to evolve into an independent on-chain security market. The essence of this is to inject re-staking ETH into structured products to create an income mechanism similar to corporate bonds or government bonds.

Renzo Protocol’s new Flow Vaults and Recollateralized Bonds give AVS (Active Validation Services) the ability to budget based on known yields, while allowing liquidity providers to lock up ETH in fixed-income style products.
Succinct has now entered the 2.5 phase of the testnet, adding a decentralized verification layer, competitive verification auctions, staking mechanisms, and hardware optimization capabilities, laying the foundation for a high-performance re-staking ecosystem.
In the Solana ecosystem, jito is also providing re-staking support for rollups through the Magicnet project, promoting the expansion of the Solana on-chain security layer.

As capital gradually flows into the EigenLayer ecosystem primitives, we are seeing the prototype of a new form of "re-pledge yield curve": the prices of short-term and long-term bonds will be priced differently based on risk perception, exit liquidity and Slash risk, with discounts or premiums.

However, composability also brings fragility. For example, the zero-coupon bond structure means that the principal needs to be locked until maturity, and any penalty event or validator downtime may seriously damage the principal - even without a smart contract vulnerability.

4. Monetization and programmability of data infrastructure

Block space is no longer the bottleneck, but data latency and composability are. Projects like Shelby and Dynamic aim to provide Web3 developers with monetizable real-time read/write infrastructure.

Shelby: Developed by Aptos and Jump, it enables sub-second reads, dynamic content, and monetizable data access. Its goal is to replace static cold storage with real-time streaming computing.
ZKsync’s Airbender module can generate zkVM proofs in 35 seconds at a cost of just $0.0001, which is six times faster and cheaper than previous solutions.
Dynamic starts from the wallet interaction layer, focusing on solving the friction issues of wallet switching and user entry. Its infrastructure supports more than 20 million users and 500+ wallets, and has achieved payment composability in multiple application scenarios.

This trend is giving rise to a new middleware business model: providing developers with low-latency, chain-independent data access services and charging on demand. In the future, AWS-style pricing models and latency-based developer tier systems may be introduced.

5. Institutional credit infrastructure and RWA integration

On-chain lending is becoming institutionalized, with automatically renewed credit lines, alternate floating rates, and leveraged RWA strategies becoming the focus.

Tenor Finance’s integration with Morpho V2 demonstrates the maturity of on-chain credit. Their new fixed-rate loan product comes with auto-renewal and fallback logic, providing institutional users with tools similar to those commonly used in TradFi.
Morpho also previewed a leveraged RWA strategy based on Apollo Global’s ACRED fund, indicating that the future trend is to build high-yield, compliant, and institutionally liquid on-chain vaults.
Euler Prime is driving stablecoin liquidity through targeted incentives, optimizing yield efficiency for market makers and vault managers seeking predictable returns.

We are getting closer to on-chain prime brokerage, and compliance-ready, structured fixed income products will lead a new round of growth. However, RWA strategies require high-fidelity oracles and robust redemption logic. Any off-chain mismatch may trigger large-scale de-anchoring or margin call risks.

6. Airdrop Economy and Incentive Mining

Airdrops remain the primary user acquisition strategy, although user retention data continues to decline.

Spark’s SNAPS event, Aethir’s Cloud Drop 2.0, and KiiChain’s ORO testnet event continued the familiar formula: points, task systems, and gamified interactions to attract attention.

However, data shows that only about 15% of the total value will remain two weeks after the airdrop. Therefore, project owners are forced to offer higher point multiples (such as LP up to 30 times) or bundle additional benefits (governance rights, increased yield) to attract users.

Platforms like Cookie.fun try to reduce Sybil attacks through social or behavioral verification, but mining whales still circumvent restrictions by splitting wallets, multi-signature structures, etc.

Projects that want long-term liquidity must turn to retention-oriented incentive mechanisms, such as veNFT lock-ups, time-weighted reward mechanisms, or re-staking access rights, rather than relying solely on speculative points to attract new users.

Macro narrative and investment framework

Although geopolitical turmoil may still hit the market hard, structural buyers are constantly absorbing every dip. Altcoins will not usher in a "general rally" like in 2021; instead, narratives with tangible catalysts (such as ETFs, real income, and exchange distribution channels) will draw attention away from pure meme speculation.

1. Macro context: Volatility tied to headlines

During the Iran-Israel conflict, Bitcoin prices fell from $105,000 to just under $99,000, proving once again that the market in 2025 is driven by headlines. Within 36 hours, the United States confirmed a strike on Iran’s nuclear facilities, the Iranian parliament threatened to block the Strait of Hormuz, Tehran symbolically launched missiles at U.S. military bases, and Trump quickly brokered a ceasefire. The entire process was compressed into a weekend, and BTC prices quickly fell and then fully recovered.

Market interpretation: With the accumulation of short leverage after three months of sideways trading, geopolitical panic has only spawned a liquidity grab, driving the transfer of chips from undetermined holders to long-term accounts. ETFs continue to absorb circulating chips, and every macro turmoil accelerates this transfer. BTC is currently fluctuating around $107,000, which is about 25% lower than the current high, but still higher than the "buy" range in the Rainbow Valuation Model (i.e. below $94,000).

2. The silence of summer, or the build-up before take-off?

Although seasonal statistics suggest that the Q3 market may be relatively quiet, two major structural forces have disrupted this trend:

Stable buying of ETFs: Experience in 2024 shows that stable ETF fund inflows have created a structural bottom. Once miners' selling pressure weakens further and chips continue to flow into corporate coffers, BTC may quickly rise to $130,000 once the volume increases.
The US stock market leads: the S&P 500 hit a new high on June 27, while Bitcoin lags behind. Historically, this gap is often repaired by BTC within 4 to 8 weeks. If the overall risk appetite remains optimistic, the crypto market may just be "lagging" rather than "failing."

3. The only alt-narrative worth paying attention to right now: Solana ETF

In a market that is extremely lacking in the "next big thing" narrative, Solana spot ETF has become the only theme with institutional weight. The SEC's review window for four ETF applications (VanEck, 21Shares, Canary, Bitwise) officially opened in January this year, and the final ruling will be released in September at the latest.

If the future Solana ETF structure includes staking rewards, its role will change from "high beta L1 trading target" to "quasi-income-generating digital equity". This will prompt staking-related targets (such as JTO and MNDE) to be included in the ETF narrative. The current SOL price below $150 is no longer pure speculation, but an early layout for "ETF packaging transactions".

4. Fundamental support for DeFi

Although meme coins and rotational narratives dominate the topic heat on the X platform, the on-chain protocols that actually have cash flow are quietly getting stronger.

5. Memecoin

The perpetual contracts recently launched on Binance, such as $BANANAS31, $TUT, and $SIREN, present a "pump and dump" trading model: these low-liquidity assets are pulled up through perpetual contracts, and the funding rate quickly turns negative, and marketers package it as "sector rotation". In essence, most of these transactions are extractive - not value-creating. It is recommended to either accept it as a "Ponzi game" and set clear stop loss and take profit points, or simply ignore it completely.

The same warning also applies to Meme coins on the Base chain (such as $USELESS, $AURA), which may soar 10 times or plummet 70% in a day.

6. Newly issued projects and structural benefits

Robinhood’s move into L2: Robinhood selected Arbitrum Orbit as its L2 solution and is driving the development of tokenized stocks. This reinforces the “exchange chain” theory pioneered by Coinbase’s Base. Robinhood may use its millions of users to drive user activity on Ethereum L2, creating a wave of enthusiasm during the usual summer trading lull.
Recent token prices for $H (Humanity Protocol) and $SAHARA (Sahara AI) show that even with a sharp sell-off in the early stages, as long as the team has a credible plan and a verifiable roadmap, their tokens can still receive active market buying in secondary transactions.

7. Investment framework for the third quarter of 2025

Core positions: Continue to allocate large amounts of BTC until ETF outflows significantly exceed inflows (there is no sign of this yet).
Rotational Beta: Continue to build a position in SOL below $160 as an alternative to the ETF and pair it with $JTO and $MNDE for potential returns with yield enhancement.
Fundamental DeFi portfolio: allocate $SYRUP, $LQTY, $EUL, and $FLUID with equal weights; when one of the projects performs outstandingly, rotate the profits to the lagging projects.
Speculative positions: Limit exposure to Meme coins to 5% of total NAV; treat each Meme coin on Binance Perpetual Contract as a weekly option trade - high returns with low costs, and set strict stops.
Event-driven: Tracking milestones of Robinhood L2; pre-positioning catalysts related to user growth in the Arbitrum ecosystem token.