Last week, Coinbase released a monthly report indicating that the leadership of the cryptocurrency market may shift from Bitcoin to other cryptocurrencies starting in September, suggesting that the so-called "Altcoin Season" may be approaching.
"Altcoin Season" refers to a market phase where cryptocurrencies other than Bitcoin—typically dominated by large tokens like Ethereum (ETH) and Solana (SOL)—experience significant price increases that outpace Bitcoin over a sustained period.
David Duong, Head of Global Research at Coinbase, pointed out three main factors driving this trend: the decline in Bitcoin's market dominance, improved market liquidity, and an increased preference among investors for high-risk assets.
Data shows that Bitcoin's market dominance has decreased from 65% in May to about 59%, while the market capitalization of altcoins has grown by over 50% since July, reaching $1.4 trillion. Generally, funds tend to flow first into large-cap altcoins before gradually spreading to mid- and small-cap tokens.
In terms of liquidity, the bid-ask spreads on major exchanges have narrowed, and order book depth has increased, making it easier for traders to enter and exit altcoin positions, thereby reducing slippage risk. Improved liquidity typically attracts larger participants who might otherwise avoid tokens with lower liquidity.
Additionally, as the macro environment stabilizes and market volatility remains manageable, investors are more inclined to seek high-risk assets for higher returns. This atmosphere is expected to drive continued capital inflows into the altcoin market, especially in scenarios where Bitcoin's price consolidates rather than surges dramatically.
As of now, Bitcoin has risen about 24% this year, but it still lags behind some major altcoins, such as ETH (+29%) and XRP (+44%); meanwhile, SOL (-4%), ADA (-9%), and DOGE (-30%) have shown relatively weaker performance.
From a technical perspective, influential altcoin analyst @AltcoinGordon pointed out on the X platform that Bitcoin's dominance has shown a rare MACD death cross on the monthly chart, marking the first occurrence since August 2020.
Historically, after a similar death cross in 2017, Bitcoin's dominance quickly fell, leading to explosive gains in altcoins, with some tokens recording increases of up to 200 times. A similar trend occurred in 2020, where mid- and small-cap tokens saw significant appreciation, and large-cap tokens also recorded several-fold growth.
As we approach 2025, similar bearish momentum is re-emerging. The MACD histogram has turned negative, consistent with previous downward cycles. If the current trend continues, Bitcoin's dominance may further decline, opening up space for a new round of altcoin rallies, which could last for several months.
Meanwhile, the CMC Altcoin Season Index has recently risen steadily, with the latest reading reaching 42 points, up from 36 points last week and 38 points last month, reflecting a gradual shift towards a neutral market pattern. Although there is still a gap to the 75-point threshold for a "full altcoin season," the index's trend indicates a buildup of altcoin momentum.
While Coinbase did not specify which types of altcoins would lead, there have been some noteworthy movements in the market recently: some altcoin projects have begun token buybacks and token burns, while others have utilized reserve funds to boost market confidence. These actions may provide support for future market performance.
Pump.fun (PUMP)
Pump.fun is a meme coin issuance platform based on the Solana blockchain, and its native token PUMP successfully completed an initial coin offering (ICO) of approximately $600 million in July this year.
Since the ICO, the platform has accelerated its token buyback and burn plans to reduce market supply and enhance token value. As of August 18, Pump.fun has repurchased approximately 7.66 billion PUMP tokens, valued at about $30.65 million, accounting for 0.766% of the total supply. Notably, a single-day buyback worth $12 million was conducted on July 16. Additionally, the platform burned about 25 million PUMP tokens in June to further reduce circulating supply.
These measures help alleviate market sell-off pressure and support PUMP's price performance amid an overall downturn in the cryptocurrency market. However, despite the effectiveness of the buyback and burn measures, PUMP's price has not sustained an upward trend. As of August 18, the price of PUMP tokens was around $0.003157, a decline from the ICO price. Analysts believe that the platform's long-term value still relies on the expansion of its ecosystem and the improvement of its governance functions.
Story Protocol (IP)
Story Protocol is a decentralized intellectual property network, and its native token IP completed a significant strategic partnership on August 11. Nasdaq-listed company Heritage Distilling will allocate $82 million from private equity financing to purchase IP tokens from the Story Foundation at a fixed price of $3.4 per IP token as its primary reserve asset. This marks IP as the first blockchain intellectual property token adopted as a reserve asset by a Nasdaq-listed company.
Furthermore, the Story Foundation plans to use the net cash income from this transaction to repurchase the same number of IP tokens on the open market within the next 90 days to support long-term market confidence in the token.
As of August 18, the market price of IP tokens was around $5.77, up 22% from 30 days ago.
Chainlink (LINK)
On August 7, the Chainlink Foundation officially launched "Chainlink Reserve," an on-chain strategic reserve mechanism designed to support the long-term value of LINK tokens by continuously creating buying pressure. According to the official announcement, all revenues generated through the Chainlink network (including enterprise payments, cross-chain service fees, and oracle data call fees) will be automatically converted into LINK on the open market through "Payment Abstraction" technology and injected into the reserve fund. This mechanism ensures that every fee directly creates demand for LINK.
As of now, the reserve fund has accumulated over $1 million worth of LINK tokens, and the project team has clearly stated that this reserve will not be withdrawn or sold in the coming years but will be held as a long-term reserve to enhance network stability and token scarcity. Industry analysts point out that this mechanism effectively builds an "automatic buyback system" for LINK tokens, which can provide a bottom support effect during market fluctuations.
However, potential risks must also be considered. First, the reserve fund is centrally managed by the foundation, and if reserves are utilized in the future due to strategic adjustments, it may impact market confidence. Additionally, the reserve mechanism relies on the continuous growth of protocol revenues; if ecosystem expansion slows, buying pressure may be difficult to maintain. Meanwhile, the reserve fund adopts a buy-and-lock model, which can enhance scarcity but may lead to decreased liquidity, making LINK's price more sensitive to large transactions.
BounceBit (BB)
BounceBit is a decentralized Layer-1 blockchain platform focused on Bitcoin restaking and multiple yield strategies. The platform launched a multi-year token buyback plan on August 6. As of August 18, BounceBit has repurchased approximately 8.87 million BB tokens from the open market, and the buyback plan will continue, with expected annual protocol revenue of about $16 million.
Additionally, BounceBit has launched the BB Prime platform, planning to deploy a $700 million tokenized fund chain from Franklin Templeton.
The decline in Bitcoin's dominance and the MACD death cross signal have sparked market expectations for an altcoin season. Coinbase predicts that funds may accelerate into altcoins in September, while project buybacks, burns, and reserve actions are providing new support for the market.
However, certain risks remain in the market, including significant price volatility of altcoins, uncertainty in project reserve and buyback strategies, and changes in the overall macro and cryptocurrency market environment, requiring investors to exercise caution.
Related: Solana (Sol) transaction peak breaks 100,000 TPS during stress test
Original article: “Bitcoin (BTC) Dominance Weakens, Institutions Predict Altcoin Season May Arrive in September”
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