Bitcoin’s Market Share Declines: Bitcoin’s dominance dropped from 65% to 62.6% in early May 2025, signaling potential capital rotation to altcoins.
Altcoins Outperform: Ether (+44.3%), Solana (+22%), and XRP (+20.6%) have outpaced Bitcoin’s 10% gain over seven days, hinting at altcoin strength.
Grayscale’s Cautious Outlook: Zach Pandl predicts Bitcoin’s dominance will stabilize at 60%-70% over 9-12 months, not plummet, due to macroeconomic factors.
Macro Influences: Easing trade tensions and investor risk appetite are boosting altcoins, but Bitcoin remains a safe-haven asset during instability.
Technical Signals: The ETH/BTC ratio at a 2020 low and altcoin market cap breaking resistance suggest a possible altcoin season.
In the ever-evolving world of decentralized finance (DeFi), Bitcoin’s dominance—the percentage of the total crypto market cap attributed to Bitcoin (BTC)—is showing signs of softening. As of May 18, 2025, Bitcoin’s dominance has slipped to 62.6%, down from a high of 65% earlier in the month, according to Cointribune. This decline has sparked excitement among crypto enthusiasts, with some speculating that an altcoin season, a period where alternative cryptocurrencies outperform Bitcoin, may be on the horizon. However, experts like Grayscale’s Zach Pandl urge caution, predicting a stabilization rather than a sharp drop in Bitcoin’s market share.
What Is Bitcoin Dominance and Why It Matters
Bitcoin dominance measures Bitcoin’s market capitalization relative to the entire crypto market, serving as a barometer of investor sentiment. When dominance rises, it often indicates preference for Bitcoin as a safe-haven asset, akin to digital gold. Conversely, a falling dominance suggests capital is flowing into altcoins—cryptocurrencies like Ethereum (ETH), Solana (SOL), and XRP—that offer diverse use cases, from smart contracts to decentralized applications. In early May, Bitcoin’s dominance fell from 65% to 63.89%, coinciding with BTC surpassing $100,000, as reported by BeInCrypto.
Bitcoin Dominance Trend (May 2025)
Bitcoin Dominance Trend (May 2025) 66% | 65% | * (65.00%) 64% | * (64.98%) 63% | * (62.60%) 62% | 61% | 60% | * (60.20%) 59% | +------------------------------------ May 1 May 7 May 10 May 18
This shift has historical precedence. In 2021, Bitcoin’s dominance dropped from 64.83% to 39.56% over seven months, fueling a robust altcoin season, per The Crypto Basic. Yet, current market dynamics suggest a more nuanced picture.
Altcoins Gain Ground, But Not Uniformly
Recent data highlights altcoins’ outperformance. Over a seven-day period ending May 13, Ether surged 44.3%, Solana gained 22%, and XRP rose 20.6%, compared to Bitcoin’s modest 10% increase, according to Cointelegraph. This capital rotation is further evidenced by a decline in USDT stablecoin dominance, indicating investors are moving funds into riskier assets like altcoins.
A notable technical indicator is the ETH/BTC ratio, which hit its lowest level since 2020, as noted by BeInCrypto. A rebound from this low could signal altcoin strength, especially if Bitcoin’s dominance continues to wane. Additionally, the TOTAL2 chart, tracking the market cap of all cryptocurrencies excluding Bitcoin, broke above a downtrend line since January 2025, suggesting altcoin momentum.
However, not all altcoins are thriving. While Ethereum and Solana shine, others like Cardano (ADA) and Tron (TRX) remain down over 50% from their 2024 peaks, per Crypto News. This selective rally aligns with K33 Research’s view that a broad-based altcoin season is unlikely, with capital concentrating in “selective winners.”
Altcoin Performance vs. Bitcoin (7-Day Period Ending May 13, 2025)
Cryptocurrency Price Gain (%) Ethereum (ETH) +44.3% Solana (SOL) +22% XRP +20.6% Bitcoin (BTC) +10%
Grayscale’s Perspective: Stabilization Over Altcoin Surge
Grayscale’s Director of Research, Zach Pandl, offers a tempered outlook. “It’s more likely that Bitcoin’s dominance will plateau as opposed to moving sharply lower,” Pandl told Decrypt, forecasting a stabilization between 60% and 70% over the next 9-12 months. He attributes Bitcoin’s resilience to its status as a non-sovereign asset, bolstered by institutional inflows via exchange-traded funds (ETFs) approved in 2024.
Pandl highlights a duality in market dynamics: “When markets are focused on macroeconomic instability and risks to the U.S. dollar, Bitcoin’s dominance will likely rise.” Conversely, when attention shifts to blockchain innovations, altcoins gain traction. This seesaw effect was evident during a brief dominance drop from 62.1% to 60.2% between May 7-10, driven by altcoin price spikes and progress in U.S.-China trade talks, which reduced safe-haven demand for Bitcoin, per The Block.
Macroeconomic Context and Investor Sentiment
Macroeconomic factors play a pivotal role. Easing trade tensions, such as U.S.-China negotiations reported on May 8, have encouraged risk-on positioning, boosting altcoins, according to The Block. However, Pandl notes that Bitcoin remains a hedge during stagflation fears, as expressed in a May 7 X post: “Fed is worried about stagflation. We think that outcome would be good for Bitcoin.”
Sentiment on X reflects cautious optimism. A post by @CryptoFrogCalls on May 16 noted, “Bitcoin dominance just dropped after peaking near 65%, and the weekly RSI hit overbought levels… Altcoin rallies followed each time. Same setup now.” While not conclusive, this suggests growing anticipation for altcoin gains.
What’s Next for DeFi?
The crypto market stands at a crossroads. While altcoins show promise, Pandl’s prediction of a 60%-70% dominance plateau suggests Bitcoin will retain significant influence. For a true altcoin season, analysts like Nic from Coinbase argue Bitcoin’s dominance must fall below 54%, alongside monetary easing and stable BTC highs—conditions not yet met.
Investors navigating DeFi should monitor technical indicators like the ETH/BTC ratio and TOTAL2 chart, alongside macroeconomic developments. As blockchain technology advances, altcoins with strong use cases may capture more market share, but Bitcoin’s role as a store of value ensures its enduring prominence.
Key DeFi Concepts
Bitcoin Dominance: The share of Bitcoin’s market cap in the total crypto market. A decline often signals altcoin growth. Current level: 62.6%.
Altcoin Season : A period when altcoins outperform Bitcoin, driven by innovation or risk appetite. Requires dominance below 54% for confirmation.
Safe-Haven Asset : Bitcoin’s role during economic uncertainty, akin to gold, boosting dominance when markets fear instability.
Bitcoin’s dominance is waning, but the jury is out on a full-fledged altcoin season.
Bitcoin’s dominance is waning, but the jury is out on a full-fledged altcoin season. With altcoins like Ethereum and Solana posting strong gains and technical indicators flashing bullish signals, the DeFi landscape is vibrant. Yet, Grayscale’s Zach Pandl reminds us that Bitcoin’s macroeconomic strength may keep its dominance steady. As the crypto market evolves, staying informed on these shifts is crucial for navigating the decentralized future.
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