Bitcoin dominance has fallen to a six-month low while altcoin market cap has jumped 50% since July, setting the stage for a potential September altseason, said Coinbase.
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Altcoins have seen significant recent growth, while crypto market conditions suggest there could soon be a shift toward cryptocurrencies outside of Bitcoin, according to Coinbase.
“We think current market conditions now suggest a potential shift towards a full-scale altcoin season as we approach September,” Coinbase Institutional’s global head of research, David Duong, in a monthly outlook report on Thursday.
The Coinbase analyst joined a growing chorus of traders and market observers tipping for an imminent altcoin season.
The firm defines as when at least 75% of the top 50 altcoins by market capitalization outperform Bitcoin (BTC) over the preceding 90 days.
Duong added that there was “significant retail capital sitting on the sidelines” in money market funds, and Federal Reserve easing could “unlock greater retail participation in the medium term.”
July’s US Consumer Price Index (CPI) showed inflation holding at 2.7% year-over-year, which has seen the of a Fed September rate cut increase to 92% on futures markets.
A lower interest rate environment potentially draws fresh capital into the market and could be a catalyst for high-risk assets such as altcoins.
Bitcoin dominance is declining
Another factor influencing the arrival of altseason is the decline in Bitcoin dominance or total crypto market capitalization share.
Bitcoin’s market dominance has declined about 10% from over 65% in May to 59% by August, “signaling the early stages of capital rotation into altcoins,” Duong wrote.
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Bitcoin dominance is currently 59.5%, around its lowest level since late January, to TradingView.
“Bitcoin dominance has just formed its first monthly bearish cross since January 2021,” crypto day trader Ito Shimotsuma on Thursday. “Back then, altcoins went up only for four months when it happened,” he said before adding, “Something similar this time will cause an up-only rally till December 2025.”
Altcoin season indexes are moving higher
Altcoin season indexes have also been climbing higher, but still remain well below the 75 threshold by which they historically define altseasons, even though the altcoin market cap has climbed over 50% since early July, Duong observed.
CoinMarketCapʼs Altcoin Season currently sits at 44, having climbed from below 25 in July. Blockchain Center’s Altcoin Season is a neutral 53, while CryptoRank’s Altseason is a level 50.
Institutional interest in ETH is driving altcoin season
Duong said that current momentum is being fueled by and stablecoin narratives, with the divergence in altseason indexes and total altcoin market cap “reflecting rising institutional interest in Ethereum,” before concluding:
“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.”
“Three key conditions need to align for an altcoin season to take hold: a supportive macro backdrop, declining BTC dominance, and a strong new narrative,” Joanna Liang, founding partner of Singapore-based venture capital firm Jsquare, told Cointelegraph.
“Past cycles were driven by clear catalysts: ICOs in 2017–2018, Layer-1s in 2018–2019, and DeFi/NFTs in 2021–2022,” she said before adding:
“In this cycle, the market is still waiting for a compelling primary-market signal that can draw significant new capital and truly ignite an altseason.”
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