The crypto market showed steady early trading on Wednesday, with Bitcoin (BTC) bouncing back above $112,000, while smaller altcoins made notable gains. CoinMarketCap’s altcoin season index rose to nearly 60%, signaling that the market may be entering a new altcoin cycle.

Story Protocol’s IP token climbed above $10 after Heritage Distillery, one of the companies adopting altcoins as treasury assets, refined its strategy to build IP reserves. Other smaller coins such as Mantle (MNT) and PUMP also posted double-digit gains over the past 24 hours, reinforcing the rotation into more speculative assets.

Traders are closely watching tomorrow’s U.S. inflation data, which could influence the next major market move. Analysts at Bitunix noted, “With inflation and jobs revisions intersecting, short-term sentiment still favors rate-cut optimism. If data stays moderate, risk assets could rebound; if inflation overshoots, dollar strength may pressure BTC and ETH.” Key levels to watch include BTC support at $108,800 and ETH support at $4,250.

Derivatives Positioning
BTC futures open interest (OI) has remained steady as traders await the U.S. CPI release. OI in ETH, SOL, and HYPE rose over 2%, while XRP, SUI, ADA, and ENA saw outflows. Annualized funding rates for top coins, except TRX and XLM, hover at or above 10%, signaling a cautious bullish bias. On the CME, BTC options notional OI reached a record $5.6 billion, while futures activity stayed subdued. Deribit data shows BTC and ETH puts through December trading at a premium to calls, reflecting lingering downside concerns. OTC desks saw long positions in ETH $4,000 puts expiring September 26.

Token Talk
Despite mixed sentiment, altcoins continue to outperform. CoinMarketCap’s altcoin season index climbed to 59/100, surpassing August’s high of 57 as capital rotates into speculative tokens. Santiment noted growing negative sentiment despite rising prices, with traders expecting BTC to fall below $100K, ETH below $3.5K, and potential altcoin retracements.

Altcoins remain resilient, with Mantle (MNT) up 15% and Pyth (PYTH) gaining 10% over the past 24 hours. BTC continues to consolidate around $112,500, trading in a $107,000–$113,000 range for more than two weeks after failing to surpass $124,000. Historically, altcoin seasons have coincided with BTC consolidation, allowing traders to rotate capital into higher-risk, higher-reward tokens without missing major BTC moves.