Grayscale Investments has released a report suggesting that the third quarter of 2025 may be characterized as an altcoin season, distinct from previous ones, partly due to Bitcoin's underperformance and the rise of centralized exchanges.
While returns across crypto markets, including Bitcoin (BTC), Ether (ETH), AI, and smart contracts, were positive in Q3 2025, Bitcoin's performance lagged behind other market segments. According to Grayscale, this pattern of returns could be considered a crypto "alt season".
Several factors contributed to this potential altcoin season. The smart contracts sector may have benefited from stablecoin legislation, likely referring to the GENIUS Act signed into law in the US in July 2025. Grayscale also noted a surge in crypto treasuries holding various tokens, increased stablecoin adoption in the US, and rising volumes on centralized exchanges.
Although the price of Bitcoin increased significantly in Q3 2025, reaching an all-time high of over $120,000 in August, its performance still lagged compared to other assets. Research indicated that Bitcoin and altcoins were falling behind gold and stocks in reaching new all-time high prices, potentially due to stablecoins leaving exchanges.
Grayscale also speculated that other US policies, including a digital asset market structure bill pending in Congress, could further drive crypto markets in the fourth quarter of 2025.
In Grayscale's ranking of the top 20 tokens for Q3 2025, based on volatility-adjusted price returns, BNB Chain, Prometeus, and Avalanche (AVAX) led the pack, while Bitcoin was not among the top performers. The list was dominated by tokens used for financial applications and smart contract platforms. Thematic narratives centered on stablecoin adoption, exchange volume, and Digital Asset Treasuries (DATs) drove this outperformance.
The Financials and Smart Contract Platforms Crypto Sectors were the most represented in the top 20, with seven and five assets, respectively. This quantifies the shift away from Bitcoin's dominance, with new utility and regulatory clarity driving the performance of altcoins.
Fundamental measures of blockchain health were mixed during Q3 2025. Users, transactions, and fees were lower quarter-over-quarter for both the Currencies and Smart Contract Platforms Crypto Sectors. Speculative activity related to memecoins has declined since Q1 2025, contributing to lower trading volume and transaction activity. However, fees for blockchain-based applications increased 28% quarter-over-quarter.
Grayscale's analysis suggests that the cryptocurrency market is experiencing frequent changes in dominant themes and shifts in market leadership. The rise of altcoins in Q3 2025 reflects the increasing importance of stablecoin legislation and adoption, rising volume on centralized exchanges, and digital asset treasuries.
