The altcoin market has surged more than 50% since early July, strengthening calls for altcoin season.
Summary
- Altcoin market value has grown by more than 50% since July.
- Institutional ETH purchases are helping drive token gains.
- Potential Fed rate cuts could push more capital into crypto.
According to Coinbase’s latest monthly market report, published on Aug. 14, this growth, alongside falling Bitcoin (BTC) dominance, could be the first sign of a shift toward a full-scale altcoin season as September approaches.
Bitcoin’s share of the total crypto market has dropped from 65% in May to about 59% in August. While CoinMarketCap’s Altcoin Season Index still sits in the low 40s, below the 75 threshold often used to define an alt season, Coinbase believes macro and liquidity factors are aligning for a rotation into altcoins in the coming months.
Institutional focus shifts to ETH
Coinbase attributes much of the recent altcoin market strength to growing institutional demand for Ethereum (ETH). Digital asset treasuries now hold nearly 3 million ETH, or just over 2% of supply. Bitmine Immersion Technologies alone has purchased 1.15 million ETH this year, supported by a $20 billion fundraising round.
This interest has spilled over into tokens with a high correlation to ETH’s daily returns, such as Arbitrum (ARB), Ethena (ENA), Lido DAO (LDO), and Optimism (OP). Of these, Lido has seen the strongest gains, rising 58% month-to-date.
Coinbase notes that LDO has historically been a straightforward way to gain ETH exposure via liquid staking. Its recent rally was likely helped by U.S. Securities and Exchange Commission guidance stating that certain liquid staking services may not be considered securities under current interpretations.
Liquidity recovery and retail capital potential
Coinbase points to over $7.2 trillion currently held in U.S. money market funds, an all-time high, as a key source of potential new inflows. Since the U.S. Federal Reserve is expected to lower interest rates in September and October, money market funds’ yield appeal may weaken, unlocking more retail participation in crypto and other risk assets.
In addition, the company’s liquidity index, which tracks stablecoin issuance, trading volumes, and order book depth, has begun to rise again after declining for six months. Coinbase expects this trend to continue, supported by a clearer regulatory path for stablecoins and other digital assets.
While the exchange stops short of declaring a confirmed altcoin season, it maintains a constructive outlook for Q3 2025. The combination of reduced Bitcoin dominance, growing ETH-led institutional activity, and improving liquidity could set the stage for a more defined altcoin rally in the months ahead.
