Bitcoin Dominance Surge Marks the End of Altcoin Rally—What Market Insiders Say

As Bitcoin dominance continues its steady ascent into the year-end period, the crypto market is sending a clear signal: altcoin season appears to be over before it truly began. The current market dynamics reveal a fundamental shift in investor positioning, with capital flowing back toward major assets while altcoins struggle against mounting supply pressures and an aggressive token unlock calendar. Recent analysis from market watchers indicates that this pullback extends beyond typical year-end consolidation patterns, signaling structural changes in market sentiment.

The Retreat: Why Altcoins Lost Their Shine

The past 24 hours painted a sobering picture for alternative assets. Bitcoin currently trades at $95.40K with a 2.17% decline, while Ethereum sits at $3.29K, down 2.36% over the same period. Beyond these major players, altcoins experienced far steeper corrections—the NFT sector led the casualties with losses exceeding 9%, reflecting a broader rotation away from riskier assets.

This pullback wasn’t spontaneous. Last week saw intense liquidation cascades, with approximately $600 million wiped out on Monday alone. Wednesday and Thursday followed with $400 million in liquidations each day as leveraged traders were forced to unwind positions amid choppy market conditions. The liquidation waves underscored just how fragile sentiment had become heading into the holiday season.

The data tells another story: perpetual open interest for Bitcoin dropped $3 billion overnight, while Ethereum saw a $2 billion decline. This deleveraging, while potentially stabilizing, left markets increasingly vulnerable to sharp swings despite overall reduced leverage.

The Flow Reversal: Institutions vs. Retail

What’s particularly telling is where capital has been flowing. Aggregate buying pressure has begun returning to Bitcoin and Ethereum, with institutional flows providing consistent backing since summer. However, the most notable development involves retail traders—they’ve been systematically rotating out of altcoins and redeploying into the cryptocurrency majors.

This shift aligns with growing market consensus that Bitcoin must establish dominance before capital meaningfully trickles down to smaller-cap assets. As one major market participant noted, “the market continues to trade choppy as liquidity continues to be thin and discretionary desks wind down into year end.”

The ETF data reinforces this narrative. Bitcoin ETFs recorded $650.8 million in net outflows over four days, with BlackRock’s Bitcoin ETF (IBIT) experiencing a single-day withdrawal of $157 million. Ethereum spot ETFs weren’t spared, posting a $95.52 million net outflow with zero inflows across all nine tracked vehicles.

Macro Pressures and an Inflation Reality Check

Market conditions remain range-bound as year-end liquidity constraints bite harder. Funding rates and basis across major assets stayed relatively compressed throughout recent selloffs, while options markets continue pricing an expansive range of scenarios given elevated implied volatility.

A recent analytical perspective from Galaxy Research highlighted an often-overlooked reality: when adjusted for inflation using 2020-dollar equivalents, Bitcoin never actually crossed $100,000, even though it hit an all-time high above $126,000 in October. According to Galaxy’s head of research, “If you adjust the price of Bitcoin for inflation using 2020 dollars, BTC never crossed $100,000. It actually topped at $99,848 in 2020 dollar terms.” This distinction matters for long-term perspective on valuation.

Traditional Finance Provides a Counterweight

Despite recent volatility, traditional finance continues making strategic entries into crypto. Bitmine added another 67,886 ETH—worth approximately $201 million—to its treasury in December, bringing monthly purchases to around $953 million. This institutional participation offers a more durable foundation than retail-driven moves alone.

What Comes Next: Two Scenarios Taking Shape

Looking ahead to 2026, market observers see diverging possibilities. One perspective suggests that current drawdowns represent strategic positioning by major players before renewed accumulation cycles kick in. The alternative view proposes a deeper market reset driven by macroeconomic headwinds and Federal Reserve policy shifts.

Some analysts maintain constructive medium-term outlooks despite near-term weakness. One perspective notes that Bitcoin is lagging the Nasdaq 100 Index by approximately 50% year-to-date, a dislocation that could set the stage for outperformance in 2026. Within this framework, Bitcoin could potentially revisit the $100,000–$120,000 range during the second quarter of 2026.

However, a critical caveat exists: without the arrival of substantial new participants entering the space, altcoin season may remain dormant. As one prominent voice cautioned, “without the emergence of new major players, there will be no altcoin season; at best, we can expect a market recovery to previous levels.” This assessment suggests that Bitcoin dominance could persist longer than traditional seasonal patterns would predict, fundamentally reshaping market structure heading into the new year.