Coinbase Institutional's analysis suggests that the cryptocurrency market is gearing up for an altcoin season in Q3 2025. Key catalysts include decreasing Bitcoin dominance, rising institutional investments, and potential changes in Federal Reserve policy.
Declining Bitcoin Dominance and Altcoin Growth
Bitcoin's market dominance has declined from 65% in May to approximately 59% in August, indicating a capital shift towards alternative cryptocurrencies. Total altcoin market capitalization surged over 50% since early July, reaching around $1.4 trillion. Analysts view Bitcoin dominance below 60% as a precursor to wider cryptocurrency rallies.
Institutional Investment in Ethereum
Ethereum has emerged as the primary beneficiary of institutional capital rotation. The native token gained approximately 50% since early July due to corporate treasury purchases and investment fund accumulation. For instance, Bitmine Immersion Technologies acquired 1.15 million Ethereum tokens as part of its treasury strategy. Investment funds collectively hold nearly 3 million Ethereum tokens, representing over 2% of the global supply. Related tokens within Ethereum's ecosystem have also posted significant gains.
Federal Reserve Policy and Its Implications
Money market fund assets have reached record levels above $7.2 trillion, creating substantial capital reserves. Federal Reserve interest rate cuts in September or October could prompt fund managers to redirect these funds towards riskier assets. Historically, this dynamic tends to benefit cryptocurrency markets during rate-cutting cycles, encouraging investment behavior among institutional investors.
Despite current index readings, Coinbase maintains optimistic projections for Q3. The combination of declining Bitcoin dominance, institutional adoption, and potential monetary policy changes creates favorable conditions for altcoin performance.
