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Market Structure Shift Challenges Traditional Cycles
A new quarterly report from Bybit and Block Scholes reveals Bitcoin’s share of the non-stablecoin crypto market continues rising, breaking historical patterns. Typically, Bitcoin dominance peaks around 230 days after halving events, followed by capital rotation into altcoins.
This cycle’s 230-day mark passed in December 2024 without the expected dominance drop that signals altseason. Instead, Bitcoin maintains its upward trend while altcoins struggle to gain momentum.
Institutional Money Changes Everything
The shift stems from changing investor demographics. Corporate treasuries, pension funds, and institutions now accumulate Bitcoin through spot ETFs and direct holdings. These “sticky” investors hold long-term, reducing the volatility and capital flows that previously fueled altcoin rallies.
Bitcoin’s strong performance adds to this dynamic. With roughly 79% gains over the past year compared to the S&P 500’s 16%, institutional investors see little reason to risk money on altcoins.
Ethereum Shows Promise But Lacks Follow-Through
Ethereum has outperformed Bitcoin since April, posting nearly 100% gains versus BTC’s 40%. The May Pectra upgrade, clearer U.S. staking regulations, and rising ETH spot ETF inflows have supported this strength.
July data shows ETH ETF inflows occasionally surpassed Bitcoin ETF inflows, suggesting potential momentum shifts. However, this performance hasn’t triggered broader market rotation yet.
Altseason Prospects Remain Uncertain
The long-awaited rotation may occur if institutional flows continue shifting from Bitcoin to Ethereum ETFs. U.S. regulatory developments around tokenization and potential staking-enabled ETFs could accelerate this trend.
Current derivatives markets show bullish sentiment for both Bitcoin and Ethereum, but lack the extreme positioning typically seen before major altcoin rallies. Without Bitcoin dominance declining sharply or euphoric market conditions, altseason remains a possibility rather than certainty.
The market structure has fundamentally changed, making traditional cycle predictions less reliable in the current institutional-driven environment.
