Altseason whispers are turning into a clear signal: Coinbase’s head of Institutional Research, David Duong, sees a growing probability of a full-scale rotation into altcoins by September as Bitcoin’s dominance slips from around 65% to 59% and market liquidity deepens. With institutional demand building—especially around Ethereum—and potential Federal Reserve rate cuts loosening financial conditions, the setup for a broad altcoin bid is forming. Here’s how to navigate the shift without getting trapped in volatility.

What’s happening

Coinbase research points to a looming altcoin season as BTC’s market dominance declines and order books thicken. The backdrop: improving liquidity, stronger institutional participation, and a rising narrative around Ethereum’s role in treasuries and stablecoins. Exchange supplies of ETH are trending lower—often a signal of reduced sell pressure—while macro expectations of rate cuts could unlock additional risk appetite across the board.

Why this matters to traders

Rotations can be fast and uneven. If capital migrates from BTC into higher-beta assets, relative performance spreads widen quickly. Traders who track dominance metrics, liquidity conditions, and ETH-led flows can position earlier, avoid illiquid traps, and size risk appropriately. The opportunity: catch the trend in leaders with real liquidity and clear catalysts, not just momentum mirages.

Actionable rotation checklist

• Monitor BTC dominance (BTC.D) and ETH/BTC: sustained BTC.D decline and rising ETH/BTC often precede broad alt bids.
• Confirm with liquidity: depth, spreads, and slippage on target pairs; favor venues and pairs with consistent volume.
• Track funding rates and open interest: look for healthy buildup without extreme positive funding (overheating risk).
• Follow institutional signals: ETH-related flows, treasury/stablecoin infrastructure, and deepening order books.
• Stage entries in tiers: scale in on pullbacks to prior breakout levels; avoid chasing vertical candles.
• Use relative strength: compare alts versus ETH (not only USD) to find true outperformers.

Risk controls in a liquidity-driven market

• Set invalidations: define levels where your thesis is wrong (e.g., prior range highs turning back into resistance).
• Employ position sizing: allocate smaller size to lower-liquidity names; keep core exposure in leaders.
• Beware false breakouts: wait for closes above key levels and volume confirmation.
• Hedge tactically: consider partial BTC/ETH exposure to offset beta risk during uncertainty.
• Watch macro: CPI, PCE, and FOMC guidance can abruptly tighten or loosen conditions.

Key themes to monitor

• Ethereum momentum: institutional participation, declining exchange supply, treasury and stablecoin narratives.
• Liquidity quality: deeper order books across majors and top alt sectors.
• Sector leadership: ETH ecosystem projects with real utility, stablecoin rails, and treasury tooling.
• Regulatory headlines: shifts can either catalyze or cap flows into specific alt sectors.

Bottom line

Coinbase’s research outlines a credible path to altseason as we approach September: weakening BTC dominance, improving liquidity, and ETH-led institutional interest. The edge belongs to traders who confirm the rotation with data, move early but cautiously, and enforce tight risk rules. Keep your dashboard focused on BTC.D, ETH/BTC, depth, and macro—then execute with discipline.

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