Coinbase, Pantera Say Market Focus Is Shifting to Altcoins

Crypto markets may be entering a new stage this cycle, with Bitcoin’s early gains giving way to a broader set of tokens, according to crypto VC giant Pantera Capital. Meanwhile, a recent report from U.S. crypto exchange Coinbase says that the conditions are forming for a full-scale alt season to kick off as early as September.

Altcoins have historically driven the bulk of market growth, a pattern Pantera highlighted in a recent blog post. The firm describes the pattern as “Phase 2” of the bull market, where altcoins could start catching up to Bitcoin.

However, historic data suggests that the magnitude of growth has been declining over successive cycles, with the X-fold gains for both Bitcoin and altcoins in early and late phases trending lower over time.

“During the 2015–2018 cycle, alts accounted for 66% of the total growth in crypto market capitalization. In the 2018–2021 cycle, they contributed 55%. So far this cycle, alts represent 35% of total market growth,” said the Menlo Park-headquartered crypto VC firm, which has over $5 billion in assets under management.

Coinbase Institutional’s global head of research David Duong also sees the conditions forming for a potential alt season within this quarter, noting that Bitcoin’s dominance has already dropped from 65% in May to below 58% this month.

In a Q3 market outlook, Duong pointed out that while CoinMarketCap’s Altcoin Season Index remains in the low 40s — short of the 75% threshold many use to define an alt season — the total altcoin market cap has surged over 50% since early July to $1.4 trillion.

Meanwhile, Google search trends show a growing interest, with searches for “altcoins” reaching levels not seen since January 2018, signaling rising attention from retail investors.

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Pantera Capital pointed to U.S. legislation as a key driver behind the momentum, saying that the GENIUS Act, which was signed into law last month, sets the stage for a rise in regulated stablecoins, while the CLARITY Act aims to clarify the rules between digital commodities and securities.

As for the main winners, the firm points to Ethereum, noting that the majority of real-world assets (RWAs) are flowing onto this network.

For context, Robinhood has launched tokenized stocks on Arbitrum, a Layer 2 chain built on Ethereum, while the majority of the largest tokenized RWA funds, like BlackRock’s BUIDL and WisdomTree’s WTGXX, are on Ethereum.

Stablecoins are also a major driver. As The Defiant reported in May, Bank of America, Morgan Stanley, and JPMorgan are reportedly exploring launching their own stablecoins.

Nearly 55% of the stablecoin market is currently on Ethereum, per DefiLlama data — though that share could shift with fintech giant Stripe and stablecoin issuer Circle both considering launching their own blockchain networks.

Coinbase’s Duong shared that view, pointing to growing institutional demand for ETH. He added that ARB, ENA, LDO, and OP trade at higher betas to ETH, though only LDO has gained the most so far — up more than 55% after the SEC suggested that some liquid staking services may fall outside securities rules.

The duration of this altcoin season remains unclear, and Coinbase analysts say it’s unlikely to see strong institutional involvement, with most momentum expected to come from retail investors.

Duong added that potential September Fed cuts wouldn’t automatically mark a crypto top, noting that more than $7 trillion in money market funds could flow into crypto if lower rates make those funds less appealing.