Bitcoin’s dominance in the crypto market is once again strengthening, and the numbers behind that shift help explain why a broad basket of altcoins is unlikely to beat out the top cryptocurrencies.
CoinMarketCap data shows Bitcoin’s dominance is gradually rising towards 60% of the total crypto market. In comparison, the dominance of altcoins is on the decline in the current market cycle.
At the same time, the Altcoin Season Index read 41, indicating a Bitcoin-driven market rather than a broad rotation where most tokens typically rise at the same time. The figure remains below the 75-plus threshold that has been common since September last year, indicating a large rotation into smaller assets.
This shows that while retail traders are in favor of rotating Bitcoin profits into speculative tokens, they have to contend with a bear market that is not giving any asset a chance to shine.
Considering this, altcoins have not received much attention. Instead, the market is characterized by a different cycle in which today’s marginal buyers are only interested in Bitcoin’s unique properties and therefore do not invest in anonymous tokens.
Institutional flows emphasize liquidity and security
The most significant change in cryptocurrencies since the last classic altcoin season has been the rapid growth of regulated infrastructure and institutional access points.
Bitcoin currently has mainstream distribution mechanisms designed for large allocators, such as spot exchange-traded funds and institutional custodial products. These allocators prioritize abundant liquidity, minimal slippage, and protection from headline risk.
Large capital allocators rarely deploy strategies diversified across dozens of tokens. Instead, buy one that has passed an internal risk committee.
This usually means selecting assets that are the oldest, most liquid, and have the clearest market position.
Even when institutional investors seek exposure to the broader cryptocurrency market, they typically start with Bitcoin and expand later.
Recent fund flow data shows a stronger bias toward quality than speculative altcoins.
According to CoinShares’ weekly report, crypto investment products recorded outflows for the fourth consecutive week. These outflows totaled $3.74 billion over four weeks, with $173 million in the most recent week alone.
The primary funding sources for these redemptions were Bitcoin and Ethereum, which resulted in losses of $133 million and $85.1 million, respectively.
At the same time, several major alternative tokens saw inflows, with XRP gaining $33.4 million and Solana adding $31 million.
This selective trend indicates that investors are not chasing the broader altcoin rally. They have some fluid name choices while remaining highly defensive.
Historical supply and demand imbalance
Altcoins are facing significant headwinds due to an unprecedented combination of intense selling pressure and significant token dilution.
According to CryptoQuant data, the cumulative buy-sell difference for altcoins (excluding Bitcoin and Ethereum) is -$209 billion in the 13 months starting January 2025. The last time demand matched supply was near zero in early 2025.
Since then, the market has moved strictly in one direction. This long period of short selling in the centralized exchange spot market indicates a complete lack of institutional accumulation of small tokens.
A negative $209 billion figure does not necessarily indicate the bottom of the market. Rather, it simply means that the buyer has disappeared.
The main factor driving this collapse is the huge amount of new assets.
According to a report by cryptocurrency wallet maker Tangem, more than 120 million unique tokens have been created as of February 2025, compared to less than 500 tokens a decade ago.
This indicates that there are too many tokens competing for market share that is not fundamentally expanding. This dynamic makes any potential recovery extremely fragile and threatens the survival of low-cap tokens.
Additionally, some of these assets consistently schedule token unlocking, further complicating this issue.
When you unlock a token, new supply is added on a fixed date, regardless of market sentiment. In fact, Keyrock research shows that 90% of these events place negative pressure on prices, often starting to decline approximately 30 days before the scheduled release date.
Bitcoin has no planned dilution, making it a cleaner holding for investors who want to avoid an impending year-long supply glut.
Volumes suggest flight to quality in this bear market
Market experts say the cryptocurrency industry is in a bear market, with Bitcoin prices falling within the $65,000 to $72,000 range.
At the end of a severe correction or bear market, investors typically abandon altcoins and rotate their funds toward mainstream digital assets.
This trend is evident in trading volumes on Binance, the market’s largest exchange, according to data from CryptoQuant.
Once Bitcoin exceeded $60,000, there was a noticeable change in the distribution of trading volumes.
On February 7th, Bitcoin trading volume on Binance regained its dominance, accounting for 36.8% of total trading volume. By comparison, altcoins accounted for 35.3% of trading volume, and Ethereum accounted for 27.8%.
This number shows that altcoin trading activity has been hit the hardest during this economic downturn.
In November, altcoins accounted for 59.2% of Binance’s trading volume. By February 13, that share had fallen to 33.6%, representing an almost 50% contraction in activity.
This pattern of capital flight has repeatedly appeared during previous correction phases, particularly in April 2025, August 2024, and October 2022.
In times of heightened uncertainty and market stress, investors naturally gravitate toward Bitcoin.
Trillions of dollars in altcoins rotate into Bitcoin
Market experts say it remains highly uncertain when the current bear market will end.
However, if historical patterns hold true, we could see a massive capital rotation from obscure tokens to BTC in the next 3-4 months.
In this situation, CEX.io analysts predict that between $740 billion and $1.2 trillion in trading volume could shift from altcoins to Bitcoin.
In a conservative scenario, Bitcoin’s volume share would increase by 5% to 6%, for a total share of 46%. This assumes a 10% to 15% decrease in total market volume.
However, a higher scenario suggests that Bitcoin’s circulation share would increase from 8% to 9%, pushing it to 49%, resulting in a rotation of $1.2 trillion.
This is because current market conditions closely mirror those of the 2022 bear market, when Bitcoin’s volume share increased by 13.5% in four months. Notably, mid-2018 saw a similar 13.6% increase.
Analysts at CEX.io said: crypto slate Given Bitcoin’s current volume dominance of 40%, it means that while a full 13.5% rally is unlikely for now, there is still considerable room for further consolidation.
According to them:
“Typically, the greater the decline in overall cryptocurrency trading volume, the greater the market share expansion that Bitcoin can achieve. For example, in 2022, total monthly trading volume decreased by approximately 17% in the May-September period. The current point in volume advantage (40%) is significantly higher than in 2018 and 2022, suggesting that the rotation has already begun. Yet, the market share is still significantly lower than during the intense rotation phase. A peak of 42-46% is observed, indicating a large scope for further consolidation. ”
(Tag translation) Bitcoin
