Grayscale has suggested that the third quarter of 2025 may have represented a unique form of “alt season,” with altcoins outperforming Bitcoin and other major assets. In its latest report, the asset manager noted that while cryptocurrencies across sectors posted positive returns, the pattern stood out for being distinct from traditional altcoin cycles. “Bitcoin underperformed other market segments, and the pattern of returns could be considered a crypto ‘alt season’ — although distinct from other periods of falling Bitcoin dominance in the past,” the report explained. Altcoins tied to smart contracts were particular beneficiaries, supported in part by the passage of the GENIUS Act in the US earlier this year. Meanwhile, AI-related tokens and other niche sectors saw growth, while Bitcoin, Ether, and broader currency plays lagged. Market Shifts Driven by Policy and Exchanges Grayscale highlighted several trends that shaped Q3. One was the growing number of corporate treasuries adding various tokens to their balance sheets. Another was the increasing adoption of stablecoins in the United States, alongside stronger activity on centralized exchanges. The firm argued that these elements combined to create a distinct market environment in which altcoins found momentum at Bitcoin’s expense. Looking ahead, Grayscale speculated that pending legislation, including a digital asset market structure bill in Congress, could further support crypto markets in Q4. Bitcoin’s Relative Underperformance Although Bitcoin surged to a record high above $120,000 in August, its performance lagged other segments of the market. Analysts suggested that both Bitcoin and altcoins were also trailing behind traditional assets such as gold and equities in reaching new records. Stablecoin outflows from exchanges were cited as one factor weighing on crypto market dynamics. This environment left altcoins better positioned to capture gains while Bitcoin’s dominance eased. Optimism for ETFs As a leader in crypto exchange-traded funds (ETFs), Grayscale noted that regulatory developments could provide a further boost. The US Securities and Exchange Commission (SEC) recently approved new listing standards for digital asset ETFs. One of Grayscale’s own products, a multi-asset crypto ETF, has already gained regulatory approval, giving investors exposure to a basket of leading assets including BTC, ETH, XRP, Solana, and Cardano. The report concluded that optimism around ETFs and supportive legislation may sustain momentum for altcoins and the broader market heading into the final quarter of the year.
