Renewed energy is not limited to Bitcoin (BTC) in the crypto market, even though it remains strong. While we might think of energy as something that powers the different coins in the crypto world, what seems to be powering the broader crypto market lately are the altcoins.
Their renewed strength seems to be coming from multiple sources, including investor optimism, the overall low-price levels of many altcoins compared to their previous highs, and a relatively low correlation with the current movement of Bitcoin.
This could be the start of a new phase in the market cycle where altcoins gain more traction. That could be driven by positive regulatory signals, structural capital inflows, and the changing behavior of Bitcoin holders.
Altcoins Rally Ahead of Regulatory Tailwinds
Bitcoin has a 59% dominance rate, which is high in a historical context, especially when considering the consistent inflows that Bitcoin has experienced over the past year. But now, Bitcoin is being pressured downward, even as it has been making a series of higher highs and higher lows. The inflow of altcoin capital — combined with the speculative nature of this market and the anticipation of the next wave of breakout assets — has led to these outperforming Bitcoin in recent weeks.
Bitcoin Dominance Drops as Crypto Market Rises
Bitcoin dominance currently sits at around 59%, which is considered relatively high. However, due to the low price base of many altcoins, they have outperformed Bitcoin during the recent market rally.
The future dynamics of… pic.twitter.com/12gKmtFg75
— CryptoRank.io (@CryptoRank_io) May 13, 2025
One of the primary reasons for this transition is the changing regulatory atmosphere in the U.S. For most of 2024, we weren’t really sure what was going to happen with crypto legislation, and that kept altcoin enthusiasm in check. But now, in recent months, we’ve started to get some more positive signals — not just for Bitcoin, with multiple spot ETFs now up and running, for example, but also for the altcoin space.
At present, ETF approvals related to leading altcoins are intense areas of focus for investors. They are also diligently pursuing the matters of ICO policy clarity and overall sector legalities. To approve an ETF is to effectively signal a green light for that entity and potentially many others to follow suit in terms of safely entering the crypto space. If the SEC were to signal that road sign, the actual pathway to the legally hazy space of altcoins beneath Bitcoin might quickly clear up and start attracting capital.
Realized Cap Growth Confirms Capital Inflows
Even though Bitcoin might be shedding some of its dominant market share, it persists in seeing very decent on-chain growth; it is just more lumbering than the on-chain growth seen in late 2024. In metric terms, we might look at Bitcoin’s Realized Cap. This is the total value of all coins based on the last-price movement and reflects a nearly $30 billion uptick since April. Running at about 3% per month, this growth is the result of fresh capital entering the Bitcoin network. I would state, however, that this is not happening with the level of intensity we saw in the on-chain accumulation that saw fresh capital enter right before the banking crisis in late March.
After a period of stagnation in April, #Bitcoin‘s Realized Cap has added nearly $30B, currently growing at ~3% monthly. While the uptick confirms renewed capital inflows, the pace still lags behind the aggressive accumulation seen in Nov–Dec ’24. pic.twitter.com/kE6EbuevlC
— glassnode (@glassnode) May 14, 2025
During the late 2024 months, there was a marked surge in capital as BTC moved toward its all-time highs. The pace now seems more measured and suggests that investor confidence remains, but is being tempered by broader macro concerns and a shift in focus toward undervalued altcoins.
Also, a considerable sum of money was invested at the cycle peak of roughly $90,000 to $100,000.
Data shows a group of coins bought at the top of the market is now safely stowed away in long-term investor wallets. These holders are betting the market will recover.
In the meantime, the actual price of Bitcoin has not quite reached half of that realized price. Still, the gradual rise in this average purchase price signifies that these long-term Bitcoin holders are not making any moves to cash out.
#Bitcoin‘s LTH realized price has climbed to $45.34K -reflecting the aging of coins bought around $90K–$100K into long-term status. With the 155-day cut-off, buyers from Dec ’24 are now LTHs, gradually lifting the cohort’s cost basis. pic.twitter.com/BZghQmnQLi
— glassnode (@glassnode) May 14, 2025
ETF Activity Signals Mixed Sentiment
Even though there are now confidence indicators for the long term, the market for spot Bitcoin ETFs took a significant dip last week. The total net outflow across all twelve U.S.-listed spot Bitcoin ETFs was $96.14 million on May 13, which is almost unheard of these days — a session with no net inflows.
This pullback may be short-term profit-taking or risk management as investors ye reallocate capital elsewhere, including the altcoin space. It may also be that market participants are sitting on the sidelines, waiting for the next re-entry signal, whether that be a macroeconomic development or a regulatory push.
On May 13, spot Bitcoin ETFs recorded a total net outflow of 96.14 million, with no net inflows across all twelve ETFs. Spot Ethereum ETFs saw a total net inflow of 13.37 million, with no net outflows across all nine ETFs. https://t.co/YcNXWVZ8H6
— Wu Blockchain (@WuBlockchain) May 14, 2025
The ETF ecosystem is still a very vital part of Bitcoin’s institutional infrastructure and is expected to continue to take on a principal role in bringing new capital to Bitcoin and in Bitcoin’s long-term adoption. ETF flows, as a general matter, are supposed to not make any big headlines, and fluctuations in ETF flows during a week are rightfully viewed as very normal occurrences.
Outlook: A Shifting Landscape
The cryptocurrency market is once again experiencing its characteristic volatility. An ecosystem that has Bitcoin as its foundational asset shows signs of increased activity whenever this digital currency is not in a downtrend. But while it has been stable for a while, Bitcoin is in danger of losing its dominance. At the same time, Ethereum and several other coins that are seen to have solid technology are working their way into many investment portfolios.
Caution is needed, yet a watchful eye is required. The three-way interaction of what is happening between Bitcoin dominance, ETF activity, and the regulatory situation could change things real fast—not over some long arc of history but in the coming months, say some folks, leading to the second half of 2025.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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Will Izuchukwu