The altcoin season may fully erupt in September

Market outlook

In the third quarter of 2025, signs of an approaching altcoin season are becoming increasingly evident. According to common definitions, an altcoin season is considered to have begun if over 75% of the top 50 altcoins by market capitalization have outperformed BTC in the past 90 days. Although this threshold has not yet been reached, market data is releasing positive signals.

Policy and funding environment

The Federal Reserve's interest rate cut expectations in September have not raised concerns about a market peak; instead, a large amount of idle funds may become a potential driving force. The balance of U.S. money market funds has exceeded $7.2 trillion, setting a historical high. As interest rates are lowered, the opportunity cost of holding cash increases, leading more funds to be allocated to the crypto market and other risk assets.

The importance of ETH

ETH remains the core of the rotation:

  • The total market capitalization of altcoins has risen by about 50% since July, but the altcoin season index remains low, reflecting the preference of institutions for ETH.

  • Digital Asset Treasury (DAT) continues to increase its allocation to ETH. Recently, BitMine alone spent approximately $20 billion to purchase 1.15 million ETH, becoming one of the largest new buyers.

  • As of mid-August, top treasury companies collectively control over 2.95 million ETH, accounting for more than 2% of the total supply.

Token performance and regulatory factors

In the assessment of ETH's beta coefficient, tokens such as ARB, ENA, LDO, and OP exhibit high volatility. Among them, LDO stands out with an increase of nearly 58% over the past month. Some of the positive sentiment stems from regulators' stance on liquid staking — if the staking rewards are a one-to-one mapping and only provide service functions, they do not constitute a securities issuance. This statement has temporarily boosted market confidence.

Funds and liquidity

BTC's market dominance has dropped from 65% in May to about 59% in August, with capital gradually flowing into altcoin sectors. Meanwhile, the issuance of stablecoins and the activity in spot and contract trading have significantly rebounded, with liquidity starting to recover after six months of sluggishness.

Conclusion

The current stage appears more like a prelude to an altcoin rotation rather than a full-blown eruption. However, as September approaches, factors such as market capitalization expansion, improved indicators, and a loose macro environment are expected to combine, leading the market to welcome a true altcoin season.