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- Bitcoin dominance is slipping below 60% while altcoin liquidity and investor appetite show signs of revival.
- Institutional ETH holdings, rising stablecoin issuance, and search trends suggest growing momentum toward altcoin season.
Coinbase Institutional’s latest monthly market outlook suggests September could bring a sharp change in market leadership from Bitcoin to altcoins, pointing to a combination of declining Bitcoin dominance, recovering liquidity, and renewed investor risk appetite as main triggers.
The report, dated August 14 and authored by David Duong, signals a cyclical market phase where capital moves from Bitcoin into large-cap altcoins, then mid- and small-cap tokens. This pattern has often emerged when Bitcoin’s share of total crypto market value weakens. Bitcoin dominance, which peaked at 65% earlier this year, has dropped to 59.48%, according to TradingView data.
Duong notes that such a transition is more likely if Bitcoin’s price stabilizes instead of spiking to new highs, as stabilization brings capital rotation into riskier assets. The Altcoin Season Index has increased from 37 to 55, moving from the neutral area into altcoin-favored setups.
Liquidity Recovery Boosts Altcoin Prospects
Liquidity conditions have been improving after six months of decline. Coinbase attributes thinner bid-ask spreads and deeper order book depth on major exchanges. Such adjustments help to cut risks of slippage, allowing traders to safely take altcoin positions.
Aiding the liquidity recovery are increased volumes, larger order books, and an increase in net stablecoin creation. The rise in stablecoin supply has coincided with stronger regulatory guidance, which has boosted market participation. Greater liquidity in the past has facilitated stronger price movements in altcoins once capital rotation sets in.
Ethereum institutional interest is also considerable. Statistics as of August 13 reveal that leading ETH treasury firms together own roughly 2.95 million ETH, which exceeds 2% of the overall supply of 120.7 million ETH. This has supported the narrative of Ethereum and other major assets.
Sentiment Turning Toward Higher-Beta Assets
Macro stability and contained volatility are enticing traders to aim for higher returns in riskier tokens. Duong observes that as confidence in the market grows, the curve of risk drifts downward from Bitcoin to altcoins. This dynamic intensifies when Bitcoin performs the worst in comparison to other large-cap coins.
Since the start of the year, Bitcoin has gained 27.66%, trailing several altcoins. ETH has gained 39.24%, XRP has surged 48.69%, and SOL has edged up 3.19% and ADA has risen 9.76%. DOGE has dropped 26.95%, which shows that gains remain mixed in the altcoin market.
Google Trends reveals global “altcoin” searches have hit a five-year high, which signals increased retail interest. That corresponds to past cycles in which spikes in search queries tended to coincide with altcoin rallies in the markets.
Coinbase’s report does not name specific leaders but confirms that September may be the opening stage of the bigger altcoin rally, based on market and macroeconomic trend movements.
