Momentum is building in the altcoin sector, with analysts at Coinbase pointing to several factors that could soon trigger a broad rotation away from Bitcoin and into other digital assets.
In its latest market outlook, Coinbase Institutional noted that a combination of macroeconomic tailwinds, shifting capital flows, and growing institutional interest in Ethereum may be setting the stage for what traders often call an “altcoin season.”
Macro Conditions Could Unlock Retail Capital
David Duong, Coinbase Institutional’s head of research, said the current setup is “increasingly favorable” for a sustained altcoin rally as September approaches. He highlighted that large amounts of retail cash remain parked in money market funds — capital that could enter crypto markets if the U.S. Federal Reserve cuts rates.
Expectations for such a move have surged after July’s inflation data showed annual U.S. CPI holding steady at 2.7%. Futures markets now price a 92% chance of a September rate cut, creating a more attractive environment for risk assets like cryptocurrencies.
Bitcoin’s Share of the Market Slips
A notable decline in Bitcoin’s market dominance is also fueling speculation of an altcoin breakout. Since May, BTC’s share of total crypto market capitalization has dropped from above 65% to around 59%, marking its first monthly bearish cross since early 2021.
Back then, altcoins rallied for four months straight — a precedent that traders like Ito Shimotsuma believe could repeat, potentially fueling gains into the end of 2025.
Early Signs from Altcoin Indexes
While widely used altcoin season indexes have yet to hit the 75% threshold that historically signals a confirmed altseason, they have been trending higher in recent weeks. CoinMarketCap’s index has risen from under 25 in July to 44 today, while Blockchain Center’s sits at 53 and CryptoRank’s at 50.
The overall altcoin market cap has already climbed more than 50% since early July, suggesting investor appetite is strengthening even if the technical definition of altseason has not yet been met.
Ethereum Leading the Charge
Coinbase attributes much of the current momentum to renewed institutional demand for Ethereum, alongside narratives around digital asset treasuries and stablecoins. According to Duong, the divergence between altcoin market growth and index readings could reflect a gradual, institution-led accumulation phase.
Market watchers say that for a true altseason to take hold, three ingredients must align: favorable macro conditions, a continued drop in Bitcoin dominance, and a fresh, compelling market narrative. Previous cycles were driven by ICOs, Layer-1 blockchain launches, and the DeFi/NFT boom — and many investors are now waiting to see what narrative will define this era.
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Source: https://coindoo.com/altcoin-market-poised-for-breakout-as-bitcoin-dominance-weakens-says-coinbase/