Altcoin dominance, excluding ETH and stablecoin, has hit 18.45%, nearing a multi-year support that triggered past altcoin rallies.
Traders are rotating into Bitcoin as altcoins struggle, with capital fleeing small caps amid global tensions and market volatility.
Historical cycles hint at a third Altseason, but altcoins remain fragile as dominance trends toward a potential structural breakdown.
Altcoin dominance, excluding Ethereum and stablecoin, has dropped to 18.45%, approaching the critical 18.2% support that has historically preceded major altcoin rallies. With Bitcoin trading near $70,000, the divergence between BTC strength and altcoin weakness signals a potential structural shift in crypto capital flows.
Key Support Levels Under Pressure
Altcoin dominance without Ethereum and stablecoins has declined to 18.45%, a level that has repeatedly marked the bottom in past market cycles. In a post by Alphractal, this key area was described as a "multi-year support" that saw rebounds in 2018 (18.5%), 2019 (18.2%), 2021 (18.3%), and 2024 (18.6%). If this support breaks, altcoins could face accelerated devaluation.
https://twitter.com/Alphractal/status/1933988304317301183
The red line tracking this dominance shows flatlining performance while Bitcoin, shown in black, continues its strong upward trend. This stark divergence suggests traders are reallocating capital away from altcoins and into BTC. Ethereum’s exclusion from this metric reveals that the true weakness lies in small- to mid-cap altcoins.
Moreover, broader altcoin dominance, excluding only stablecoins, is now at 27.91%. This metric includes Ethereum, and its recent decline brings it within 4% of the critical 24% floor that marked a reversal zone in early 2020. Repeated failures to sustain dominance above 30% since 2022 point to continued underperformance.
Ethereum Masks Deeper Weakness
Ethereum’s strong market cap position continues to conceal the underlying fragility of the broader altcoin market. According to a report by Alpha Signals, dominance metrics that include ETH remain artificially inflated, while those that exclude it show a consistent erosion in market share for the rest of the altcoin sector.
Bitcoin dominance is surging, and Ethereum is holding ground, but altcoins, excluding both, are rapidly losing liquidity and attention. The capital is concentrated in high-liquidity, high-trust assets as volatility looms. Repeated failures by smaller altcoins to maintain rebounds suggest a risk-off sentiment among investors.
World tensions have further contributed to this shift. In the wake of recent military tensions in Iran and Israel, the whole crypto market responded badly. Many altcoins dropped sharply overnight, showing a rapid flight to safety as geopolitics threatened to limit risk-on assets overall.
Historical Patterns Indicate Altseason Setup
Despite widespread bearish pressure, previous cycle history may be some cause for optimism. The altcoin universe has entered an all-too-familiar third accumulation phase. The same 2016 and 2019 patterns resulted in tremendous altcoin rallies.
However, with Bitcoin dominance on the rise and smaller altcoins falling out of favor, conditions are grim. If dominance breaks historic support, the crypto universe may endure some profound structural change in favor of large-cap assets.
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