Grayscale says the third quarter of 2025 may go down as one of the most unusual altcoin seasons the market has seen.

In a new report, the asset manager pointed to Bitcoin’s weaker performance relative to other sectors and a lift from centralized exchanges as signs of a “distinct” cycle.

While Bitcoin touched a record high above $120,000 in August, its gains trailed those of smart contract platforms and AI-linked tokens. Grayscale argued that stablecoin legislation in the U.S., including the passage of the GENIUS Act in July, helped fuel demand for altcoins, while Bitcoin, AI tokens, and currencies lagged.

The report also highlighted several structural shifts in crypto markets. More treasuries are holding tokens on their balance sheets, stablecoin usage within the U.S. has accelerated, and centralized exchanges saw rising volumes through Q3. These changes, Grayscale said, created the right conditions for an altcoin rally that diverged from earlier cycles driven by falling Bitcoin dominance alone.

Looking ahead, the firm suggested pending U.S. policies – including a comprehensive market structure bill under debate in Congress – could be a catalyst for Q4. Optimism is also building around new crypto ETFs, with the SEC recently approving updated listing rules and clearing Grayscale’s multi-asset fund that holds Bitcoin, Ethereum, XRP, Solana, and Cardano.

Despite Bitcoin’s milestone price moves, Grayscale noted that both BTC and altcoins still lagged behind gold and equities in terms of new all-time highs. Stablecoin outflows from exchanges, it added, may have played a role in dampening momentum across the board.

Grayscale concluded that investors should not underestimate the importance of regulatory shifts. In its view, the combination of legislative progress, ETF approvals, and growing institutional adoption could shape not just the next quarter but the trajectory of the entire crypto market into 2026.