Coinbase Q3 2025 Outlook: September Marks a Critical Moment for Altcoin Season, Highlighting the Need to Strategically Position in the Ethereum Ecosystem
Coinbase’s 2025 Q3 Outlook: Signs of Altcoin Season Ahead
Coinbase, in its latest 2025 Q3 outlook, points out that while we are still in the early stages of altcoin season, multiple macroeconomic and regulatory positives are brewing, creating the conditions for a broad influx of funds into altcoins. The decline in Bitcoin’s market share, active institutional buying of ETH, and expectations of interest rate cuts by the Federal Reserve could trigger this shift in September.
Altcoin Season is coming
As September approaches, the transition to a full-scale altcoin season is likely. Our positive 3Q25 outlook stems from macro trends such as potential Fed rate cuts and expected regulatory advancements. More key themes in this Monthly Outlook report ↓
— Coinbase Institutional ️ (@CoinbaseInsto)August 14, 2025
Bitcoin Market Share Decline: Signals of Capital Shift Emerge
Coinbase notes that Bitcoin’s market share (BTC.D) has dropped from 65% in May 2025 to 59% in August, indicating that market funds are gradually shifting toward the altcoin market.
Although the CMC Altcoin Season Index remains at 44, still some distance from the typical altcoin season threshold of 75, the total market capitalization of altcoins has risen over 50% since early July, reaching $1.4 trillion, showing clear signs of capital rotation.
Coinbase believes that the surge in the market share of open interest in altcoins, as shown in the chart above, signals a potential activation, but the relatively low ratio indicates that the full explosion has not yet occurred. This initial transition often serves as a precursor to a full-scale altcoin season.
Focus on Rate Cuts: $7.2 Trillion Cash Likely to Spill Over
U.S. money market funds (MMF) currently hold up to $7.2 trillion in assets, setting a historical high. This unprecedented high cash position reflects investors’ defensive mentality toward uncertainties in traditional markets, such as trade conflicts, overvaluation, or concerns about economic growth.
However, Coinbase’s analysis suggests that once the Federal Reserve initiates rate cuts in September and October, the attractiveness of MMF yields will decline, prompting this pool of funds to seek higher-risk and higher-reward assets, further driving up the cryptocurrency market.
Cryptocurrency Liquidity is Recovering
Additionally, the company’s cryptocurrency liquidity indicator z-score shows that liquidity is on the rise based on factors such as stablecoin issuance, spot and contract trading volumes, and order depth, indicating an end to the downward trend that has persisted since January.
Reviewing ETH’s Current Narrative: Institutional Buying Leads the Market
Contrary to the weakness of the altcoin season index, the surge in altcoin market capitalization is largely driven by institutional demand for Ethereum (ETH). Crypto reserve enterprises (DATs) and narratives surrounding stablecoins and real-world assets (RWA) have become the main drivers of ETH’s rise.
As of August 13, major ETH reserve companies collectively held approximately 2.95 million ETH, accounting for over 2% of the total supply. This scale of holdings provides stable buying support for ETH.
High Beta Altcoins: Who Stands Out?
Among the altcoins more correlated with ETH, tokens such as ARB, ENA, LDO, and OP have daily returns with a Beta value exceeding 1. However, recently only the staking leader LDO has notably benefited from ETH’s rise, with an increase of 58% since August, and a Beta value of 1.5.
In traditional finance, a Beta value greater than 1.0 indicates that the asset is theoretically more volatile than ETH, potentially amplifying both gains and losses. Coinbase believes that LDO’s standout performance is due in part to staking itself providing institutions with direct exposure to ETH, as well as benefiting from the SEC’s recent recognition that liquidity staking is not considered a security.
However, if guaranteed returns, secondary staking, or additional yield mechanisms are involved, they may still be classified as securities, but the regulatory stance has indeed boosted market confidence in the short term.
September Could Be a Key Moment for Altcoin Season
In conclusion, Coinbase maintains a positive outlook for the Q3 cryptocurrency market, believing that the decline in Bitcoin’s market share, institutional buying of ETH, recovering liquidity, and expectations of rate cuts are laying the groundwork for an altcoin season. While we are still in the early stages of capital rotation, with the simultaneous improvement of macroeconomic and regulatory conditions, September may welcome a more mature and comprehensive altcoin rally. Readers are encouraged to closely monitor capital flows and regulatory developments.
Risk Warning
Investing in cryptocurrencies involves high risks, and their prices can be highly volatile. You may lose all your principal. Please assess risks carefully.
