Coinbase Institutional’s monthly outlook identifies three principal drivers for a potential altcoin season commencing in September: falling bitcoin dominance, enhanced market liquidity and elevated investor risk appetite.
The first factor, bitcoin market dominance, refers to BTC’s share of total crypto market capitalization. Following a peak earlier this year, BTC dominance has shown signs of contraction, historically triggering capital rotation into alternative tokens.
Second, liquidity conditions across major exchanges have improved, with tighter bid-ask spreads and deeper order books. Higher liquidity reduces trading friction for large orders, making blue-chip altcoins more accessible for institutional participants.
Third, sentiment dynamics indicate greater willingness to pursue higher-beta assets as macroeconomic volatility subsides. With volatility contained, investors may seek returns beyond bitcoin’s comparatively moderate gains.
Coinbase’s report, prepared by its global head of research, frames the transition as a cyclical shift. In previous cycles, large-cap altcoins such as Ethereum and Solana led market rallies before momentum broadened to smaller-cap tokens.
While the report stops short of predicting specific token outperformers, it highlights the pattern of rotation down the risk curve, driven by confidence in market stability and appetite for diversified exposure.
Year-to-date performance shows BTC up 27.2%, with major altcoins outperforming: ETH +37.9% and XRP +49%. If historical patterns hold, these tokens may continue to capture disproportionate gains in the opening phase of altcoin season.
Investors are advised to monitor liquidity metrics, dominance ratios and funding rates in altcoin derivatives. Sustained improvement across these indicators would support the thesis of a broad market leadership shift.
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