August 2025 in Crypto: Alt-coin season gathers momentum as the bull market matures

Cyclical Rotation

In last month’s update, I suggested that the long-awaited altcoin season might finally be underway. That call was based on the sharp acceleration of capital inflows into spot Ethereum ETFs—an early signal of rising institutional interest. August’s price action added weight to this view. Altcoins continued to outperform even as Bitcoin set a new all-time high above $122,000 mid-month. While Bitcoin later pulled back 7%, Ether surged 14%, with Solana posting similar gains. This divergence helped our large-cap benchmark, the Top10 Crypto CTI, finish the month broadly flat.

Bitcoin’s relative weakness likely reflects profit-taking. After climbing more than 60% between mid-April and mid-August—a run that left traditional assets far behind—many investors appear to have rotated profits into smaller-cap tokens, which historically outperform as the crypto bull market matures.

Greater Regulatory Clarity

Helping to fuel the ongoing rally is the sustained push by the Trump administration to right the crypto wrongs of the past and bring much-needed legal clarity to digital assets in the US. This is because, as noted in the previous monthly, such clarity is essential for wider adoption, serving as a “must-have” for crypto-curious yet heavily regulated tradfi institutions.

Building on the momentum of July’s Crypto Week, when three major digital asset bills were passed, the SEC in the first half of August issued updated guidance on liquid staking tokens, such as those from Ethereum’s Lido and Solana’s Jito. Unlike native staked tokens, which are locked to secure the network, liquid staking tokens remain tradeable. This makes them popular in DeFi for yield farming, borrowing, and leveraging, as they improve capital efficiency without losing staking income. By confirming that these tokens are not securities, the SEC removed the need for liquid staking providers to register with them, easing the regulatory burden and opening the door for institutional adoption because it allows tradfi firms to confidently offer these tokens within compliant frameworks.

Additionally, President Trump signed an executive order directing the US Labor Department to re-evaluate restrictions on including alternative assets—which would include cryptocurrencies as well as private equity and real estate—in 401(k) retirement plans, providing investors with yet another way to gain exposure to digital assets.

The Stablecoin Vanguard

Collectively, these measures mark a deliberate shift toward a more crypto-friendly policy landscape, supporting the US’ broader digital finance strategy. Yet, for all the chatter and focus on unbacked private cryptocurrencies (especially Bitcoin strategic reserves, of which there has been scant additional information over recent months) at the core of the strategy are US dollar-backed stablecoins. Indeed, it is telling the first major piece of US cryptocurrency legislation that got signed into law was the GENIUS Act, which stands for the Guiding and Establishing National Innovation for US Stablecoins Act and defines “payment stablecoins” as digital assets backed by low-risk reserves such as cash, bank deposits, or short-term US Treasury notes.

There are, certainly, solid reasons why US dollar-backed stablecoins are the preferred crypto choice of the Trump administration. They utilize crypto rails, which provide an incomparably more efficient payment architecture than incumbent tradfi systems, but because they can only be issued by companies under the financial oversight of the Fed and other US regulatory bodies, they remain firmly under government control. If an issuer fails to comply with government regulators’ demands, their stablecoins will no longer be deemed acceptable for making payments, which is a death sentence for such tokens.

Globally, stablecoins account for less than $300 billion out of crypto’s $4 trillion total market cap but they are already widely viewed as an integral part of the crypto ecosystem because when operated correctly (which unfortunately has not always been the case, as evidenced by the 2022 Luna/Terra crash) they have the lowest price volatility of all cryptocurrencies, meaning they are best placed to satisfy one of the main prerequisites of money— to serve as a medium of exchange. Moreover, if Trump’s plan succeeds, their market cap share is set for rapid expansion, the anticipation of which has helped reinvigorate Ether’s price lately, given that more than half of all stablecoins are issued on the Ethereum blockchain.

Stablecoins have, unquestionably, captured public attention of late as evidenced by Google search trends data. Over the past month, searches for the term “stablecoin” have exploded— see image. This is in marked contrast to equivalent searches for “cryptocurrency” or “Bitcoin,” both of which remain well below the peaks seen in 2017 and 2021, a clear indication that while prices are at new cycle highs, we are nowhere near the manic phase that characterizes the late stages of a typical asset price bubble.

Google Search Trends – Worldwide

Source: google

Not Everyone’s A Fan

This embrace of digital assets by governments—and their legislative efforts to facilitate tradfi adoption of crypto as well as elevating the role of fiat-backed stablecoins—does not sit well with hardcore cypherpunks, the community that conceived and championed cryptocurrencies from the outset. To them, it enables governments to perpetuate the debt-based fiat monetary systems they strongly oppose—a far cry from the future envisioned by Satoshi Nakamoto in the 2009 Bitcoin white paper.

Such concerns are understandable, but the logic is flawed as I argued in a research note published back in 2022 entitled “Roadmap To Utopia: Or How Crypto-anarchists Will Learn To Love Regulation” , which laid out how the crypto landscape would evolve in the years ahead. Even though this journey is still in its infancy, the direction of travel is becoming clearer by the day and it is entirely consistent with my prior expectations, so it is worth revisiting this note. In doing so it will, hopefully, provide succor to those crypto anarchists worried that their long-held dream of financial utopia is dead. Let me assure them it isn’t, far from it.

Jumping The Chasm

In the aforementioned research note, I observed that like every other tech product to become successful, crypto has to jump what marketing people call “The Chasm”. This is when the early adopters – the enthusiasts and the visionaries – are joined by the so-called pragmatists and the conservatives (small c), or moms and pops in more colloquial terms – see image.

Stylized Technology Adoption Curve

Source: Author

Right now, we are at the chasm with the estimated 560 million¹ people worldwide that already own crypto comprising the innovators and early adopters. Governments are intending to use stablecoins as the bridge between tradfi and crypto, leveraging the increased efficiency of blockchain technology to entice people to stick with fiat-money systems. However, this will also serve as the bridge that will get cryptocurrencies over the chasm. Moreover, as I explained in the note, increased regulation, rather than being a hindrance will actually play a key supporting role. To wit,

“The simple truth is people, especially the pragmatists and conservatives in the early and late majorities, feel more comfortable investing in something which is overseen by the government. It is one of the reasons why the traditional financial sector is regulated – the majority of people demand it. Regulation brings with it the perception of legitimacy.

Increased government regulation will make crypto less “scary” for these majorities,…”

A Crypto Gateway Drug

Whether in the form of privately-issued fiat-backed tokens or their government-issued equivalents CBDCs (the distinction between the two types of tokens are minimal given the regulatory hurdles imposed on privately-issued stablecoins and the public sector backstop given to the financial sector, which will issue these tokens) they require certain infrastructures in order to function. The most visible manifestation of this are digital wallets that users must use to be able to hold and exchange tokens. Over time, as stablecoin adoption increases the public’s familiarity with the tech that supports cryptocurrencies will also increase. Crypto will no longer be viewed by the mainstream public as scary, rather it will become ubiquitous, even mundane in much the same way that mobile wallets on smartphones have displaced physical debit and credit cards.

The worry of the crypto anarchists is that with this set-up money may never be able to break free from government bondage. Such fears are misplaced.

Encouraging the adoption of fiat-backed stablecoins may delay what many crypto fans believe is the inevitable collapse of the current debt-based monetary system. But, unless governments do the hard work of bringing the public finances onto a more sustainable footing by cutting spending (and as mentioned in the previous monthly there is no evidence of this), stablecoins will never be able to serve as a reliable store of value unlike finite supply private cryptocurrencies like Bitcoin (and increasingly Ethereum). And, if offered a choice between holding a currency unable to maintain its purchasing power and one that can, guess which one the public will ultimately choose?

This is important because governments do not decide what constitutes money. Yes, they can demand people pay their taxes in fiat money so fiat money in some shape or form will always exist, but there is no reason why the populace has to use them exclusively, or for even the majority of their financial transactions. Contrary to popular belief, it is the general public not the government that gets to decide what money is.

What makes the position even more precarious for governments is that cryptocurrencies that do not touch the traditional financial system in any way are beyond their reach, ie they are unbannable. This is why peer-to-peer transactions between self-custodied wallets of private cryptocurrencies like Bitcoin and algorithmic stablecoins are excluded from crypto regulations in most jurisdictions. If governments were able to bring these transactions inside the regulatory perimeter they would, but they can’t. Of course, historically gold was the only escape route out of the fiat money system open to the public but now thanks to Satoshi’s vision there is an additional one, one better suited to the digital-first we inhabit.

So to the extent that government action in the form of increased regulation and the promotion of stablecoins (either private or as CBDCs) encourages greater crypto adoption, and this in turn means the technological infrastructure associated with cryptocurrencies becomes increasingly familiar and less “scary”, it should not be seen as a negative. Rather, correctly considered they are the very catalysts crypto-anarchists need for their long hoped for dream of technological utopia where money is (largely) freed from government bondage to be realized.

1 This equates to a global ownership rate of almost 7%.