A digital graphic depicts a lock overlaid with blockchain technology symbols, representing Bitcoin security and encryption.

Protecting digital assets, this conceptual image showcases the intricate world of Bitcoin security and blockchain technology through digital encryption. By MDL.

Finance

How Did US Policy and Stablecoins Trigger a 2025 Altcoin Surge? Grayscale Reveals Q3 Market Secrets

Grayscale: Q3 2025 was altcoin season. Bitcoin underperformed, smart contracts thrived due to policy changes.

byAndres Castro

September 26, 2025, 7:40 PM

Executive Summary

Grayscale identified the third quarter of 2025 as a “distinct” altcoin season, marked by Bitcoin’s underperformance compared to Ether and other market segments.

This market shift was partly fueled by significant US policy changes, including the GENIUS Act, and increased activity on centralized exchanges.

While overall returns were positive, the smart contracts sector was a key beneficiary, whereas Bitcoin, despite reaching an all-time high of over $120,000 in August, still lagged behind other assets and traditional markets.

The Story So Far

The “altcoin season” identified in Q3 2025, characterized by Bitcoin’s underperformance relative to Ether and other market segments, was significantly influenced by the US GENIUS Act, which bolstered the smart contracts sector and stablecoin adoption. This period also saw increased trading volumes on centralized exchanges and a growing trend of corporate crypto treasuries diversifying their token holdings.

Why This Matters

The third quarter of 2025 signaled a “distinct” altcoin season, with Bitcoin underperforming against Ether and other altcoins, suggesting a potential shift in crypto market dynamics. This period was heavily influenced by US policy changes, such as the GENIUS Act, which bolstered sectors like smart contracts and stablecoin adoption, and further legislative developments are anticipated to continue shaping market movements. Consequently, the crypto landscape is evolving with increased corporate diversification into various tokens and rising activity on centralized exchanges, underscoring the growing impact of regulatory frameworks on asset performance.

Who Thinks What?

Grayscale identified the third quarter of 2025 as a “distinct” altcoin season, characterized by Bitcoin’s underperformance compared to Ether and other market segments.

Grayscale attributed this market shift partly to significant changes in US policy, including the GENIUS Act, and increased activity on centralized exchanges.

Grayscale’s research suggested that Bitcoin, despite a substantial price increase, lagged behind altcoins and struggled to keep pace with traditional assets like gold and stocks in achieving new all-time highs.

Grayscale has indicated that the third quarter of 2025 likely marked a “distinct” altcoin season, characterized by Bitcoin’s underperformance compared to Ether and other market segments. This shift, according to the asset management firm’s report released on Thursday, was partly fueled by significant changes in US policy, including the GENIUS Act, and increased activity on centralized exchanges.

Q3 Market Dynamics and Sector Performance

The Grayscale report highlighted that while overall returns across various crypto-related markets, including Bitcoin, Ether, AI, and smart contracts, were positive in Q3, Bitcoin specifically lagged behind. This pattern of returns led Grayscale to classify the period as an alt season, distinguishing it from previous cycles where Bitcoin dominance typically fell.

The smart contracts sector was identified as a key beneficiary, largely due to new stablecoin legislation. This likely refers to the GENIUS Act, which was signed into US law in July. In contrast, sectors like AI, general currencies, and Bitcoin did not demonstrate the same level of growth.

Broader Market Trends and Policy Influence

Beyond individual asset performance, Grayscale’s analysis detailed several other notable trends. The report observed a surge in the number of corporate crypto treasuries that now hold a diverse range of tokens on their balance sheets. Additionally, there was increased adoption of stablecoins within the US and a significant rise in trading volumes on centralized exchanges.

Looking ahead, Grayscale speculated that further US policies could impact crypto markets in the fourth quarter of 2025. This includes a digital asset market structure bill that is currently pending in Congress, which could serve as another catalyst for market movement.

Bitcoin’s Relative Underperformance

Despite Bitcoin experiencing a substantial price increase in Q3, reaching an all-time high of more than $120,000 in August, its performance was still considered to be lagging when benchmarked against other assets. Research cited in the report suggested that Bitcoin and various altcoins were struggling to keep pace with traditional assets like gold and stocks in achieving new all-time high prices, partly attributed to stablecoins migrating off exchanges.