Key Takeaways:
BTC dominance drops 5.8% in one week, hitting 61%, its lowest since March
The decline marks the largest weekly drop since June 2022
Altcoins outperform, pushing total market cap from $3T to $3.8T in three weeks
BTC–altcoin correlation weakens, raising risk of high volatility and forced liquidations
Unit bias drives retail flow into low-cost tokens, fueling altcoin momentum
Bitcoin's (BTC) dominance rate has experienced its largest weekly decline in over three years, dropping 5.8% to just under 61%, according to data from TradingView. This marks the sharpest downturn since June 2022 and comes amid a broader surge in altcoin performance.
At the end of June, Bitcoin's dominance peaked near 66%, but as BTC stalled below $120,000, capital began rotating into altcoins—particularly Ether (ETH) and mid-cap tokens. Over the past three weeks, the total cryptocurrency market capitalization rose from $3 trillion to $3.8 trillion, while BTC's market share dropped, signaling an active altseason in progress.
BTC–Altcoin Correlation Weakens
More notably, the correlation between Bitcoin and altcoins has weakened, and in some cases, turned negative, according to Alphractal analysts.
“One chart stands out: the Correlation Heatmap. It shows the average correlation between altcoins and BTC is dropping fast — even turning negative,” Alphractal stated in a Telegram post. “Historically, low correlation is a red flag. It often precedes periods of high volatility and mass liquidations — whether from shorts or longs.”
This shift suggests that altcoins are no longer following Bitcoin's price movements, increasing the risk of divergent price swings, especially in highly leveraged markets. In past cycles, similar decoupling events preceded violent liquidations across both BTC and altcoin derivatives markets.
Unit Bias Fuels Altcoin Demand
Adding to the altcoin surge is the psychological phenomenon known as unit bias. As Bitcoin reaches record-high valuations, many retail and novice investors gravitate toward cheaper coins like DOGE, XRP, and other memecoins, believing that owning “whole units” represents better value.
This misconception—favoring more units of a cheaper token over fractional BTC ownership—leads to capital inflows into low-priced altcoins, further driving Bitcoin dominance lower.
"Unit bias continues to skew investor behavior," one analyst noted. “New entrants often believe buying 1,000 DOGE is better than 0.01 BTC, even if the dollar value is the same.”
What Comes Next?
With Bitcoin consolidating below $120,000 and altcoins rallying, market participants are now on alert. The weakening BTC correlation could create pockets of volatility, especially if a larger correction triggers liquidation cascades across low-liquidity altcoin markets.
While the ongoing altseason is fueling significant gains, the decoupling of BTC from the rest of the market presents both opportunity and risk—especially for leveraged traders navigating shifting momentum.
