Coinbase Signals Potential Full-Scale Altcoin Season as Bitcoin Dominance Drops

Highlights:

• Coinbase experts say altcoins are rising as more investors buy Ethereum, and Fed cuts may help.
• BTC dominance fell from 65% in May to 59% in August, which shows early money movement into altcoins.
• The company said improving liquidity, clearer regulations, and growing ETH activity could boost the altcoin market soon.

Altcoins have recently experienced strong growth, and market trends indicate a possible move toward cryptocurrencies beyond Bitcoin, Coinbase reports. David Duong, head of research at Coinbase Institutional, said in Thursday’s monthly outlook that current market trends may create favorable conditions for a full altcoin season.

The Altcoin Season Index remains in the low 40s, under the 75 level that typically indicates a full altcoin rotation. However, Coinbase notes that strong institutional demand for Ethereum, along with a potential Federal Reserve rate cut in September, could attract more retail investors and provide additional momentum to the market.

BTC’s portion of the crypto market dropped from 65% in May to approximately 59% in August. Coinbase highlighted that this decrease indicates the beginning of funds shifting into altcoins. At the same time, altcoins’ combined market value has jumped more than 50% since July, reaching $1.4 trillion.

Altcoin Season is coming

As September approaches, the transition to a full-scale altcoin season is likely.

Our positive 3Q25 outlook stems from macro trends such as potential Fed rate cuts and expected regulatory advancements.

More key themes in this Monthly Outlook report ↓

— Coinbase Institutional 🛡️ (@CoinbaseInsto) August 14, 2025

Ethereum Drives Altcoin Growth

Coinbase said the recent strength in the altcoin market is largely due to rising institutional interest in Ethereum. Digital asset treasuries currently hold nearly 3 million ETH, accounting for just over 2% of the total supply.

Bitmine Immersion Technologies has purchased 1.15 million ETH this year, supported by a $20 billion funding round. This growing demand has also boosted tokens closely tied to Ethereum’s daily performance, including Arbitrum (ARB), Ethena (ENA), Lido DAO (LDO), and Optimism (OP). Among these, Lido has performed the best, surging 58% month-to-date. Coinbase says LDO offers an easy way to gain ETH exposure through liquid staking.

Coinbase notes that United States money market funds hold over $7.2 trillion, a record high. With the Federal Reserve expected to cut interest rates in September and October, these funds may become less attractive. This could lead more retail investors to move into crypto and other risk assets.

Coinbase’s liquidity index, monitoring stablecoin trading and activity, has begun increasing again after six months of decline. Clearer rules for stablecoins and other digital assets could keep this trend going. The exchange does not call it an official altcoin season yet, but stays positive for Q3 2025. Lower Bitcoin dominance, more ETH institutional activity, and better liquidity may help trigger a stronger altcoin rally soon.

Duong stated:

“With the altcoin market cap climbing and the Altcoin Season Index showing early positive signals, we believe conditions are setting up for a potential rotation into a more mature altcoin season as we head into September.”

Expert Says Bitcoin Bearish Cross Could Spark Altcoin Rally

On Thursday, crypto trader Ito Shimotsuma noted that Bitcoin dominance experienced its first monthly bearish cross since January 2021. He explained that historically, altcoins rallied for about four months after such a cross. Shimotsuma expects a similar pattern this year, potentially driving an altcoin rally through December.

This is your best signal for #Altseason.

Bitcoin dominance has just formed its first monthly bearish cross since Jan 2021.

Back then, alts went up only for 4 months when it happened.

Something similar this time will cause an up-only rally till December 2025.

Do you think it's… pic.twitter.com/LqEoajR7bT

— Ito Shimotsuma (@ItoShimotsuma) August 14, 2025