Altcoin Season Predicted by Coinbase as Interest Rate Cuts Loom

Coinbase analysts predict a "full-scale altcoin season" heading into September, driven by anticipated interest rate cuts from the Federal Reserve and a potential rotation of capital away from Bitcoin. The catalyst for the altcoin season is expected to be the unlocking of trillions of dollars parked in money market funds. Ethereum has already seen significant growth due to growing institutional adoption and accumulation by treasury companies.

Coinbase analysts have predicted a "full-scale altcoin season" heading into September, driven by anticipated interest rate cuts from the Federal Reserve and a potential rotation of capital away from Bitcoin. The catalyst for the altcoin season is expected to be the unlocking of trillions of dollars parked in money market funds.

The altcoin season is characterized by a period where alternative cryptocurrencies gain traction and outperform Bitcoin. According to Coinbase's experts, Bitcoin's dominance is expected to drop from 65% to 59% by September [1]. This decline in dominance is set to create favorable conditions for altcoins, with Ethereum leading the charge.

Institutional interest is a significant factor driving the growth of altcoins. Ethereum, in particular, has seen substantial growth due to increasing adoption by institutional investors. Over 1.2 million ETH ($3B) was allocated to corporate treasuries by Q2 2025, with staked ETH generating $89.25B in value, surpassing Bitcoin’s passive 'hodl' strategy [4].

David Duong, the Global Head of Research at Coinbase, stated that the altcoin season is already in its early stages, citing Bitcoin’s declining market dominance. He pointed out that the metric has fallen from 65% in May to as low as 59% this month. Duong also noted that the anticipated interest rate cuts from the Federal Reserve in September and October could further catalyze the altcoin season [2].

Improving market liquidity is another factor contributing to the altcoin season. Coinbase’s z-score measure of weighted cryptocurrency liquidity has shown improvement after a six-month decline, indicating better conditions for altcoins to thrive [2].

While most altcoins have been restrained by limited retail participation, Ethereum has seen significant growth thanks to treasury companies. Duong identified ARB, ENA, LDO, and OP as top picks for investors seeking higher beta ETH plays. However, he noted that LDO was the only asset that appeared to have benefited from Ethereum’s recent rally, citing its 58% gain over the previous month [2].

Institutional investors are increasingly adopting Ethereum for staking and DeFi, outpacing Bitcoin in yield generation and treasury allocation. Regulatory clarity and Ethereum ETF inflows are also driving institutional confidence and market dominance [4].

The evolving cryptocurrency landscape anticipates a significant shift towards altcoins, driven by diminishing Bitcoin dominance and growing institutional interest. As Ethereum leads this movement, investors should remain alert and adaptive to navigate the future of crypto investing.

References:
[1] https://en.coinotag.com/coinbase-research-predicts-possible-shift-to-altcoin-season-amid-decreasing-bitcoin-dominance-and-rising-ethereum-interest/
[2] https://finance.yahoo.com/news/coinbase-predicts-full-scale-altcoin-123107867.html
[3] https://investorempires.com/this-7-year-old-bitcoin-whale-just-sold-76m-in-btc-to-buy-this-altcoin/
[4] https://www.ainvest.com/news/ethereum-treasury-accumulation-strategic-race-institutional-dominance-long-term-creation-2508/