TLDR
- Coinbase expects altcoin season to begin in September as Bitcoin’s market dominance falls from 65% to 59%
- Three key factors driving the shift: declining Bitcoin dominance, improving liquidity, and increased investor risk appetite
- Altcoin market cap has jumped 50% since July while various altseason indexes remain below the 75% threshold
- Federal Reserve rate cuts could unlock retail participation and drive capital into higher-risk crypto assets
- Institutional interest in Ethereum and digital asset treasuries is fueling current momentum
Coinbase Institutional forecasts that September could mark the beginning of altcoin season, a market phase where alternative cryptocurrencies outperform Bitcoin over sustained periods. The prediction comes as Bitcoin’s market dominance has declined from over 65% in May to 59% in August.
David Duong, Coinbase’s global head of research, identifies three primary drivers for this potential market shift. Falling Bitcoin dominance represents the first factor, with historical patterns showing capital flows into large-cap altcoins before moving to smaller assets as Bitcoin’s market share decreases.
The second driver involves improving market liquidity across major exchanges. Tighter bid-ask spreads and deeper order books are making it easier for traders to enter and exit altcoin positions without heavy slippage. This improved liquidity encourages participation from larger institutional players who previously avoided less-traded tokens.
Growing investor appetite for higher-risk assets forms the third catalyst. As macroeconomic conditions stabilize and market volatility remains contained, investors are seeking higher returns in riskier crypto assets beyond Bitcoin.
The altcoin market capitalization has already climbed over 50% since early July. However, various altseason indexes remain below the critical 75% threshold that historically defines true altcoin seasons. CoinMarketCap’s Altcoin Season Index currently sits at 44, while other indexes range between 50-53.
Market Conditions Supporting Altcoin Growth
Federal Reserve monetary policy plays a crucial role in the potential altseason scenario. July’s Consumer Price Index showed inflation holding at 2.7% year-over-year, pushing the odds of a September Fed rate cut to 92% on futures markets. Lower interest rates typically draw fresh capital into markets and serve as catalysts for high-risk assets like altcoins.
🇺🇸 U.S. PPI Comes in hotter than expected…
PPI (MoM) +0.9% vs +0.2% forecast
Core PPI (MoM) +0.9% vs +0.2% forecast
(YoY) +3.7% vs +2.9% forecastInflation from tariffs starting to hit producers? pic.twitter.com/cAh0hd93yi
— Trader Edge (@Pro_Trader_Edge) August 14, 2025
Duong notes that retail capital remains on the sidelines in money market funds, and Fed easing could unlock greater retail participation in the medium term. This potential influx of retail money could provide additional fuel for altcoin price appreciation.
Bitcoin dominance has reached its lowest level since late January, forming what some analysts call its first monthly bearish cross since January 2021. During that previous occurrence, altcoins rallied for approximately four months before the cycle ended.
Institutional Interest Drives Current Momentum
Current altcoin momentum stems partly from institutional interest in Ethereum and digital asset treasuries. The divergence between altseason indexes and total altcoin market cap reflects this growing institutional participation in the Ethereum ecosystem specifically.
Year-to-date performance data shows mixed results across major cryptocurrencies. Bitcoin has gained 27.2%, while Ethereum leads with 37.9% growth and XRP shows 49% gains. Other tokens like Solana have posted modest 1.67% gains, while Dogecoin has declined 27.5%.
Joanna Liang from Singapore-based venture capital firm Jsquare explains that three conditions must align for altcoin season: supportive macroeconomic backdrop, declining Bitcoin dominance, and strong new narratives. Previous cycles were driven by clear catalysts like ICOs in 2017-2018, Layer-1 blockchains in 2018-2019, and DeFi/NFTs in 2021-2022.
The market currently awaits a compelling catalyst that can draw new capital and truly ignite sustained altcoin outperformance. Coinbase maintains that current conditions favor a broader rotation into altcoins over the coming months, though the duration and magnitude depend on both crypto-specific and macroeconomic factors.
