Altcoin Season Emerges as Bitcoin Loses Steam: Coinbase

Altcoin season may be in full bloom as Bitcoin’s influence softens, according to a fresh analysis from Coinbase. The exchange highlighted that changing market dynamics are signaling a broader investor shift toward altcoins as the third quarter of 2025 progresses.

Altcoin Momentum Builds

In its latest August research report, Coinbase outlined a measurable decline in Bitcoin dominance—from 65% in May to around 59% as of August 2025. This drop is often interpreted as early evidence of capital rotating into alternative digital assets. Despite the Altcoin Season Index from CoinMarketCap still lingering in the low 40s—well below the 75 mark required to definitively confirm an altcoin season—the overall market cap for altcoins has surged over 50% since early July, now totaling $1.4 trillion as of August 12.

These indicators suggest that investor appetite may be swinging toward altcoins, particularly as liquidity conditions improve. Coinbase noted enhanced order book depth, more active spot and perpetual trading, and narrower bid-ask spreads—factors that collectively reduce slippage and encourage greater market participation across various tokens.

All these factors align to support an expanding altcoin market, as traders find it increasingly easier to buy and sell without causing significant price impact.

Institutional Trends Drive Sector Divergence

Coinbase further pointed out a notable divergence between the Altcoin Season Index and the rising value of the overall altcoin market. This split, it explains, is largely due to substantial institutional demand for Ethereum (ETH).

A major example is Bitmine Immersion Technologies, which recently purchased 1.15 million ETH through a $20 billion capital raise. The firm now has the flexibility to invest up to $24.5 billion in ETH. Likewise, Sharplink Gaming, a notable player in Ethereum-based digital asset treasuries (DATs), now holds approximately 598,800 ETH.

This wave of ETH accumulation from institutions isn’t just confined to direct holdings. Coinbase observed that certain tokens tied closely to Ethereum, such as ARB, ENA, LDO, and OP, exhibit higher beta values, making them more sensitive to movements in ETH’s price. Among them, Lido DAO (LDO) has reacted most strongly to recent ETH rallies, climbing 58% already this month. Since LDO offers a liquid staking route to ETH, it presents an amplified opportunity—with a beta of 1.5 that indicates 50% greater volatility than ETH itself.

Adding to LDO’s momentum was a recent announcement from the U.S. Securities and Exchange Commission (SEC). On August 5, the SEC clarified that liquid staking protocols are not considered securities so long as the staking activities are largely “ministerial” and that staking rewards are transferred one-for-one from the protocol. This statement offered much-needed regulatory clarity and further boosted confidence in LDO.

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In summary, the combination of institutional ETH investment, improved liquidity across altcoins, and a favorable regulatory stance on liquid staking has fueled momentum for a broader altcoin season. While Bitcoin remains a foundational asset in the crypto ecosystem, it’s clear that altcoins are stepping deeper into the spotlight as 2025 unfolds.