What Is Altcoin Index? When Politics Intervene Fed, Altcoin Season Falls Freely

Macroeconomic events are piling up, and the crypto market is warning: this is the time for all altcoin holders to pay attention. It’s not just individual events that are concerning, but the way the market reacts to them that shows investor sentiment is changing, directly impacting the highest-risk asset group – with altcoins being the first target.

What Does the Altcoin Season Index Drop to 39 Mean?

The Altcoin Season Index – a metric measuring the relative strength of altcoins compared to Bitcoin – has just fallen to 39. If you’re not familiar with this index, simply put, it indicates whether investment capital is flowing into altcoins or retreating. When the index is high, it signals an “altcoin season” – a period when small, high-risk coins surge in value. When the index is low like now, it tells a completely different story: capital is fleeing.

Interestingly, Bitcoin doesn’t drop to the same extent, but altcoins are being pushed down much further. This isn’t because these projects suddenly weaken, but because the market is in “defense mode.” When uncertainty rises, investors tend to hold onto the “safest” assets – Bitcoin. Altcoins, with all their inherent risk, are the first to be sold off.

Jerome Powell vs. Donald Trump: When the Fed Loses Relative Independence

While the market is unstable, a bigger political event is unfolding. Chairman Jerome Powell is about to appear directly before the Supreme Court regarding Donald Trump’s attempt to dismiss Lisa Cook – a Fed Board of Governors member. This isn’t just a “personal drama” – it’s a battle over Fed independence.

When the head of the central bank has to go to court over a political dispute, it means monetary policy is no longer purely a “technical” domain. It becomes a political arena. For financial markets, this is a red warning signal – institutional instability is always the biggest fear for investors.

Tariffs, Price Drops, and Defensive Capital Flows

Almost simultaneously, Trump announced new tariffs targeting the European Union. The stock market reacted sharply, risk sentiment weakened, and – of course – altcoins were pressured. Equity markets are volatile, capital is flowing out of high-risk investments.

This clearly shows the true investor sentiment today: when political instability + trade tensions return, they will:

• Hold onto “core” assets (BTC, gold, USD)
• Significantly reduce exposure to high-risk groups
• Use altcoins mainly for “selling off”

Capital isn’t retreating because of the intrinsic issues of altcoins, but because the market is shrinking – and that’s a crucial difference.

Why Are Altcoins Affected First?

Altcoins aren’t “weak coins” – they are assets with higher beta. When the political-trade environment worsens, high-beta assets always suffer first. Even if a project has no issues, capital still flows out due to technical and psychological reasons, not fundamental ones.

History shows: when macro conditions become turbulent, altcoin season almost always loses out first. It’s a market law, not a surprise. The Altcoin Season Index dropping to 39 is a concrete reflection of this.

Capital Prioritizing Safety: The Coming Scenario

The question for altcoin holders is: how long will the current macro environment last? With the Fed embroiled in political disputes, tariffs returning, and geopolitical tensions rising, a prolonged period of uncertainty is inevitable.

In such a context, capital will prefer safety over growth. Bitcoin will be held as “digital gold,” but what about altcoins? They will be on the “wait and see” list. The Altcoin Season Index falling low is the market’s way of saying: this is not the time for high-risk bets – it’s time to protect what you have.