Bitcoin's dominance declines, altcoin season may start in September: Coinbase | CoinDesk JAPAN

• Coinbase Institutional's latest research report indicates that an "altcoin season" may begin in September, citing three major market trends as reasons.
• According to reports, the decline in Bitcoin dominance and the improvement in liquidity are leading to better performance of altcoins.
• Additionally, the recovery of investors' risk tolerance may extend the upward trend until the end of the year.

According to the latest monthly outlook from Coinbase Institutional, the "altcoin season" may begin in a few weeks. This outlook predicts that starting in September, the market leadership will shift from Bitcoin (BTC) to altcoins.

The altcoin season refers to a market phase where cryptocurrencies other than Bitcoin record a significantly higher rate of increase than BTC over a certain period. In particular, it is often led by large tokens such as Ethereum (ETH) and Solana (SOL).

In a report dated August 14, written by David Duong, the Global Research Director at Coinbase Institutional, three main factors are identified: the decline in Bitcoin's market dominance, the improvement in liquidity, and the increasing willingness of investors to return to high-beta assets. Duong explains this as a cyclical shift where capital moves down the risk curve as market confidence improves.

Bitcoin's market dominance (the percentage of the total market capitalization of the cryptocurrency market) has shown signs of decline after peaking earlier this year. Coinbase claims that when this indicator decreases, historically, funds flow into large alts, and then subsequently into mid and small-cap coins. The company believes this rotation effect will become even more pronounced in September.

The liquidity trend is also turning favorable for altcoins. Coinbase points out that due to the narrowing of buy-sell spreads on major exchanges and the thickness of the order book, traders can more easily buy and sell altcoin positions without suffering significant slippage. The improvement in liquidity often encourages the participation of larger players who may have avoided tokens with low trading volume.

The third factor is sentiment. Mr. Duong states that as macroeconomic conditions stabilize and volatility is suppressed, investors are likely to seek higher returns in riskier crypto assets. This environment could encourage sustained capital inflows into the altcoin market, especially if the Bitcoin price remains stable rather than reaching new highs.

Coinbase refrains from predicting which tokens will lead the market, but emphasizes the pattern of past market cycles, where strong altcoins first outperform, followed by mid- and small-cap coins. The report warns that while September may mark the beginning of a rise, its duration and magnitude depend on both market and macroeconomic conditions.

BTC has risen by 27.2% year-to-date, but it is lagging behind major altcoins like ETH (+37.9%) and XRP (+49%). On the other hand, SOL (+1.67%), ADA (+8.96%), and DOGE (-27.5%) are also underperforming.

Coinbase claims that there is a possibility of an expansion in rotation to altcoins in the coming months based on the overall market situation.

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