July 21, 2025

Bitcoin's (BTC) $BTC

dominance rate has recorded its steepest weekly drop in over three years, signaling a shift in investor appetite toward altcoins amid rising market optimism and renewed capital inflows.


According to TradingView data, BTC’s share of the total crypto market cap fell by 5.8% in one week, sliding to just under 61%, the lowest level since March. This marks the most significant drop since June 2022, when macro-driven market shocks triggered a similar divergence.


🚀 Altcoins on the Rise


As Bitcoin cooled off below $120,000, the total crypto market cap surged from $3 trillion to $3.8 trillion in just three weeks. Leading this growth are Ethereum (ETH)$ETH

and several altcoins, including memecoins and layer-1 ecosystem tokens, which have outperformed BTC on a relative basis.


"Altcoins are gaining traction as traders rotate capital out of BTC," noted Binance Research. "The broad-based rally suggests a growing appetite for higher beta plays."


🔄 BTC–Altcoin Correlation Weakens


Another key dynamic is the declining correlation between BTC and altcoins, historically a precursor to increased volatility and liquidation risk, particularly for leveraged traders. As correlations weaken, price divergence becomes more likely—raising the stakes for directional bets in both directions.


📊 The Role of Unit Bias in Altcoin Surge


Analysts also point to unit bias—a psychological tendency among retail investors to favor cheaper tokens over expensive ones—as a major force behind the altcoin momentum.


“As Bitcoin pushes toward record highs, new investors often shift to tokens with lower per-unit prices, assuming they offer better value or faster growth potential,” explained Alphractal in a recent report. “This behavioral misjudgment often redirects flows to coins like DOGE or XRP, despite differences in fundamentals or supply.”


This trend reinforces the growing appeal of altcoins and helps explain Bitcoin's declining dominance, even as overall market sentiment remains bullish.



📌 Key Takeaways




  • BTC dominance falls by 5.8% in one week, biggest drop since 2022.



  • Total crypto market cap climbs to $3.8 trillion, led by ETH and altcoins.



  • BTC–altcoin correlation weakens, increasing the risk of volatility.



  • Unit bias drives retail preference for lower-cost altcoins.



  • Memecoins and small-cap tokens are among the top beneficiaries of the rotation.



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