The next phase of altseason hinges on two critical factors: China's economic stimulus initiatives and how investors globally react to fears of a potential recession.
China's Stimulus and its Impact on Crypto
China's monetary policy could be a key catalyst for the next altcoin surge. Central banks often stimulate economic growth by lowering interest rates or creating special financing conditions, effectively increasing the money supply. This injection of liquidity tends to benefit risk assets, including both stocks and cryptocurrencies. Historically, expansive stimulus policies in major economies have coincided with bullish trends in cryptocurrency markets. For instance, Bitcoin saw one of its best Septembers in 2024, surging 12.3% in value, which aligned with China's stimulus efforts that included interest rate cuts and reduced reserve requirements for banks.
A March 2025 report by 21Shares highlighted a strong 94% correlation between Bitcoin's price and global liquidity, emphasizing how sensitive digital assets are to shifts in monetary policy. Nexo spokesperson noted that excess liquidity injected into the system in 2015 and 2020 found its way into alternative assets.
However, China's strict regulatory controls on crypto limit direct participation in the market. State-backed alternatives may absorb some liquidity, or capital could flow into traditional safe-haven assets like gold.
Despite the potential boost from Chinese stimulus, recent economic indicators in China paint a mixed picture. In July 2025, retail sales declined by 0.1% compared to the previous month, and investments in fixed assets fell by 5.3% year-over-year, marking the steepest contraction since March 2020. The urban unemployment rate also climbed to 5.2% in July. Bloomberg Economics analysts suggest that the People's Bank of China (PBOC) might introduce stimulus measures as early as September.
Recession Fears and Investor Sentiment
Global investors' response to growing recession fears is the second critical factor influencing altseason. The cryptocurrency market has shown a tendency to behave like other risk assets during times of market upheaval. This means that during economic downturns, when investors become more risk-averse, they may shy away from cryptocurrencies, leading to price declines.
U.S. consumer sentiment has deteriorated, with a significant percentage of Americans anticipating worsening unemployment. Yet, market optimism has persisted, with the S&P 500 hitting a record high and Treasury yields rising, suggesting that investors are becoming less risk-averse.
During times of uncertainty, investors' risk tolerance and investing habits tend to become more conservative as speculative trading becomes less desirable. Some analysts believe solid digital asset projects with real-economic utility will do well regardless of the macroeconomic environment.
Altcoin Season Outlook
Coinbase projects Q3 2025 could kick off a true altcoin season as Bitcoin dominance drops and altcoin market cap surges. Bitcoin's market dominance has declined from 65% in May 2025 to approximately 59% by August 2025, signaling the early stages of capital rotation into altcoins. The total market capitalization of all altcoins has surged over 50% since early July, reaching approximately USD 1.4 trillion.
However, analysts suggest that this altseason may be more selective, with narrative-driven runs in specific sectors like AI and Real World Assets (RWAs). An oversupply of tokens, driven by memecoin dominance, may dilute gains.
Overall, the next step for altcoins depends on the interplay between China's stimulus measures and investors' risk appetite amid recession fears. While Chinese stimulus could inject liquidity into the crypto market, boosting altcoins, persistent recession fears may dampen investor sentiment and lead to a flight to safety. Monitoring these factors will be crucial for understanding the trajectory of altseason in the coming months.
