Last night, Bitcoin broke through $100,000 again, and the market exploded! This surge relied on two major factors: the Trump administration reached a tariff agreement with a certain major country, easing global trade tensions, which ignited risk assets; plus this agreement made everyone feel that the Federal Reserve and the government would 'join forces', making interest rate cuts come faster, leading to excessive liquidity in the market. Institutions are also aggressive, with MicroStrategy holding over 555,000 BTC, and the capital for Bitcoin ETF flowing back in, how could the price not rise? Meanwhile, Ethereum (ETH) also soared due to the Pectra upgrade, rising sharply and igniting everyone's expectations for the 'altcoin season'. As the 'big brother' of altcoins, Ethereum should have led the charge but failed to outpace Bitcoin. After the halving in April 2024, Bitcoin rose over 70%, while Ethereum also increased but was held back by Bitcoin's 75% market dominance and various issues, failing to take center stage. To be frank, altcoins still lack a 'catalyst' to ignite them.
Bitcoin occupies 75% of the market: we need to wait for altcoin season.
Bitcoin's dominance (the proportion of BTC in the total cryptocurrency market cap) now stands at 75%, making it a top player in recent years! This means altcoins only share 25% of the pie, with all funds being absorbed by Bitcoin, making it difficult for altcoins to turn around at present.
Historical comparison: during the bear market of 2017 and mid-2019, Bitcoin's dominance fell to 70%-73%. At that time, people were hesitant to take risks, mostly buying BTC. Now, with 75% dominance, the market is still conservative, and funds for altcoins have not loosened.
Why is this happening? Institutions are buying like crazy (MicroStrategy holds over 555,000 BTC, and BlackRock is also increasing its position), plus there was some panic in the market before the tariff agreement, leading everyone to buy BTC for hedging. ETF capital is flowing back, and favorable policies have sent BTC soaring.
What's happening with altcoin season?
The Altcoin Season Index from Blockchain Center states that if 75% of the top 100 altcoins outperform Bitcoin within 90 days, it counts as 'altcoin season'. In December 2024, this indicator briefly achieved that, suggesting a possible continuation of the trend into 2025. However, the current index is only 29, plus Bitcoin's 75% dominance means the market is still 'Bitcoin's world'. We have to wait until Bitcoin's dominance falls below 60% for altcoins to take off. Some users on X even complained, 'ETH has risen a bit, but hasn't set the pace; the altcoin season is still far off.' Bitcoin breaking $100,000 might cause profits to flow into altcoins; Ethereum's rise has started things off well, but the 75% barrier isn't easily broken.
The past and present of altcoins
Altcoins (all cryptocurrencies except BTC) usually see a surge after Bitcoin's halving. The halving in April 2024 will reduce the new BTC supply by half; historically, funds would flow from BTC to altcoins during this time, such as the 'DeFi Summer' and NFT craze in 2021, when the total market cap of altcoins once exceeded BTC by 130%. However, so far, although Ethereum has risen significantly due to the Pectra upgrade and Solana and Cardano's trading volumes have increased by 18% and 12% respectively, Bitcoin's 75% dominance makes people hesitant to buy.
These data indicate that funds are beginning to seep into altcoins, but the volume is still insufficient; Bitcoin remains the leader. Forbes suggests that 2025 could be the 'real altcoin season', but we need to wait for a catalyst. InvestingHaven is more optimistic, predicting that the total market cap of altcoins could reach $25 trillion by the end of the year, close to the peak in 2021.
The 'catalysts' and 'roadblocks' of altcoin season
Some experts analyze that altcoins need a big move to turn around. The tariff agreement and interest rate cut expectations on May 8 made the market excited, but Bitcoin's dominance and market differentiation remain a big problem.
What can ignite the market?
Regulatory easing: Virtune speculates that 2025 may see the approval of spot ETFs for Solana and XRP, with institutional funds pouring in. Trump's pro-crypto policies (such as promoting clear regulations) could also add fuel to the fire. Someone on X said, 'Once the Solana ETF is approved, altcoins will take off.'
Economic recovery: Mudrex analysis suggests that low inflation and interest rate cuts will lead to more money. The tariff agreement on May 8 may make interest rate cuts come faster, benefiting altcoins.
Technical breakthrough: Ethereum's Pectra upgrade aims to make the network faster and cheaper, potentially reigniting interest in DeFi and NFTs. Solana's DeFi and meme coin ecosystem is also expanding.
What is blocking the way?
Bitcoin is too strong: a 75% market dominance is like a wall, with altcoin funds being drained by BTC.
Market instability: before the tariff agreement, the global economy was shaky, and people still preferred to buy BTC for hedging. Users on X complained, 'Now the rise depends on news; it's hard to say what happens next.'
The quality of altcoins varies: there are all kinds of projects in the market, good ones take time to emerge, while bad ones may hold back progress.
Why is Bitcoin so strong?
Why has Bitcoin surged away from altcoins? There are several hard-core reasons:
As stable as gold: BTC is viewed as a commodity, with low regulatory risks, unlike Ethereum, which is often under scrutiny.
Institutions are crazy about it: MicroStrategy alone holds over 555,000 BTC, and institutional money is pouring in.
Hedging tool: when the economy wobbles, BTC becomes 'digital gold', and the ETF inflow and tariff agreement directly sent BTC soaring.
The story is well told: BTC is viewed as 'value storage', while most altcoins are treated as 'speculative products'; when the market panics, no one dares to touch them.
What's going on with Ethereum? Why hasn't it led the charge?
Ethereum is the 'big brother' of altcoins; the Pectra upgrade (optimizing sharding, making Layer 2 smoother) has caused its price to rise sharply. Coinpedia predicts it could reach $5,925 by 2025, and with a bit of luck (upgrades exceeding expectations or a successful ETF), it might break $6,500. Users on X said, 'Pectra has brought ETH back into the spotlight, but BTC is too strong.' So why hasn't it outperformed Bitcoin and led the altcoin season? There are several pitfalls:
Too many coins, unable to rise: Ethereum's supply exceeds 120.7 million ETH, a historical high. The burning fee is being consumed quickly, inflation is rising, and by Q1 2025, the inflation rate might reach 0.5%. Scarcity is gone, how can the price rise?
Users haven't seen much increase: the Pectra upgrade is appealing, but the network's activity hasn't kept up, with active addresses and trading volumes rising slowly (only 12% increase as of May 4). The total value locked (TVL) in DeFi only increased 10% in 2024, far worse than in 2021.
Institutions aren't that supportive: institutions are clustering to buy Bitcoin ETF, while ETH ETF's inflow is slow. In May, the average daily inflow for ETH ETF was only $30 million, while Bitcoin ETF was $120 million, a significant difference.
The market is unkind: Bitcoin's 75% dominance has squeezed out capital, Ethereum hasn't played its role as a leader well, and altcoin season is stuck.
However, there are also highlights; recently, Binance withdrew 85,000 ETH, which has historically been associated with declining selling pressure and rising prices. But whether it can truly turn around still depends on the situation. The ETH/BTC MVRV ratio shows that Ethereum is currently undervalued; a similar situation in 2019 led to a surge in ETH, but these pitfalls need to be resolved first.
Is there hope for other altcoins?
Ethereum didn't set a good example, what about other altcoins?
Solana: trading volume rose 18%, with a booming DeFi and meme coin ecosystem. Electric Capital predicts that in 2024, Solana will have more new developers than Ethereum. Virtune speculates that once its ETF is approved, the price could soar to $300.
Dogecoin: driven by the community, it could explode if the market gets excited; it has already risen 30% in 2024. On X, @dogecoin_fan (May 8) said, 'Dogecoin could take off at any moment.'
New stars: Brave New Coin predicts that AI coins (like Turbo AI, Grass Token) can rise 200%+, driven by the AI craze. Meme coin PEPE is also being hyped on X.
How should users operate?
With Bitcoin's 75% dominance, be cautious when playing altcoins:
Focus on major events: watch for regulation (when will Solana ETF be approved), interest rate cuts, on-chain data (how hot is Ethereum DeFi), and find the right entry point.
Don't put all your bets on one: mix in the big players like Ethereum, Solana, and include some AI coins and meme coins; don't put all your risk in one basket.
Using BTC as a shield: altcoins are highly volatile, holding some Bitcoin stabilizes, and if the ETH/BTC ratio breaks 0.05, that might signal the beginning of altcoin season.
Be flexible: once Bitcoin's dominance falls below 60%, quickly increase positions in altcoins, focusing on capable ones like Solana.
Don't rush blindly: set stop-loss orders, and don't chase meme coins to the moon.
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