[Altcoin Season 2025] Why September Marks the Crypto Market Shift

Altcoin season 2025 is approaching, and September could be the turning point investors have been waiting for. The outlook for Q3 2025 remains bright, though the emphasis has shifted slightly. Just a few months ago, the market focused heavily on Bitcoin-led strength, but now "September could mark the real beginning of the altcoin market" is gaining traction.

Altcoin season, simply put, refers to when three out of four of the top 50 altcoins outperform Bitcoin over a three-month period. While we haven't reached this threshold yet, recent trends are gradually tilting in that direction.

There has been much debate about whether the Fed's September rate cut marked the market peak. However, the market still has significant 'hidden liquidity'.

Money Market Fund cumulative total and flows chart from 2021 to 2025 showing record $7 trillion levels

Notably, over $7 trillion is locked in money market funds alone. MMFs are ultra-short-term financial products where people safely park their money, and they're currently at record levels. If this massive capital starts moving in search of higher yields after rate cuts, it could flow into risk assets like cryptocurrencies. In April, $150 billion exited MMFs, coinciding with significant rallies in crypto and stock markets. Since June, MMF balances have increased by over $200 billion again, yet cryptocurrency prices continued their upward trajectory. Typically, when MMF cash increases, crypto takes a breather, but this opposite movement signals that more money could enter the market ahead.

Ethereum is playing a pivotal role in this phase. Since early July, total altcoin market cap has grown over 50% to reach $1.4 trillion.

Altcoin Season Index chart showing index at 40 level with altcoin market cap growth from May to August 2025

Yet, the 'Altseason Index' tracked by CoinMarketCap remains low at around 40. This means while not officially in altseason territory, funds are already moving with ETH at the center. Behind this lies institutional demand. Interest in digital asset treasuries, stablecoins, and real-world asset tokenization has repositioned ETH from a simple cryptocurrency to core infrastructure for traditional finance.

Bitmine Emergent Technologies has secured 1.15 million ETH and plans to raise up to $20 billion more to increase holdings. Sharplink Gaming holds approximately 600,000 ETH. The top few institutions alone hold about 2.95 million ETH, exceeding 2% of total supply.

LDO/USDT price chart showing bullish pattern formation and 1.5x volatility compared to ETH

During this process, individual altcoin movements have diverged. While ARB, ENA, and OP showed greater volatility than ETH, LDO actually benefited most from ETH's rise. Lido is the leading platform where anyone can easily earn staking rewards by depositing Ethereum. LDO's price gained significant momentum after the SEC recently stated "under certain conditions, highly liquid staking tokens won't be considered securities."

Currently, LDO exhibits about 1.5x the volatility of ETH. This means greater upside potential but also faster declines. However, investors should note that the SEC's position is merely staff-level interpretation and could change in future litigation or commission-level decisions.

Bitcoin dominance forecast chart showing projected decline from current 59% to 42% target level

Bitcoin dominance decreased from 65% in May to 59% in August. This signals some market funds are shifting toward altcoins. Despite the sharp increase in altcoin market cap, the still-low index might suggest we're in the preliminary stages of a full altseason.

Macroeconomic conditions point in the same direction. Considering past cases where global M2 money supply led Bitcoin prices by about 110 days, liquidity could increase significantly in late Q3 and early Q4. This wave of money will particularly impact the retail-driven altcoin market. While institutions still focus on major coins like Bitcoin and Ethereum, retail funds predominantly flow into altcoins.

Internal market indicators also show positive changes. Liquidity metrics combining stablecoin issuance, spot trading volume, perpetual futures volume, and order volume have stopped their six-month decline and recently showed recovery. Increasingly clear regulations are also facilitating capital inflows.

Bitcoin H4 timeframe chart showing TP2 target reached at $115,873 with potential bounce setup

Ethereum H2 timeframe showing completed BAT harmonic pattern with bullish reversal targets

In summary, the market is in a transitional phase from Bitcoin's solo performance to an expanded stage including altcoins. Bitcoin dominance is declining, institutional demand centered on ETH is growing, funds locked in MMFs are preparing to unlock, and stablecoin issuance is increasing. As these factors converge, September likely marks the beginning of a proper altcoin season. This trend deserves attention as a structural shift aligned with macroeconomic policies and institutional changes, rather than a brief rally.