The altcoin market has faced persistent headwinds since 2024, with many assets still struggling to recover from the euphoric highs reached during the bull cycle in 2021. Despite sporadic gains, broader momentum remains delicate, reflecting reduced speculative appetite, tighter liquidity conditions and a gradual shift in investor preferences towards more established crypto assets. This prolonged underperformance has kept much of the altcoin sector trading well below historic highs, reinforcing cautious market sentiment.
Recent analysis from CryptoQuant provides additional context by examining capital turnover patterns during Bitcoin’s recent recovery phase. Following its piercing decline, Bitcoin has entered a consolidation range roughly between $65,000 and $72,000, an area where significant activity from whales, long-term holders and institutional participants appears to be concentrated. Such consolidation zones often attract strategic accumulation rather than speculative exposure to altcoins.
Historically, deep corrections or slow bear phases have typically resulted in capital migrating towards Bitcoin while altcoins experience reduced inflows. Binance’s trading volume data – broken down into BTC, ETH and other altcoins – clearly highlights this active. As Bitcoin recovered above $60,000, there was a noticeable shift in the distribution of volumes, suggesting that investors are increasingly favoring Bitcoin over exposure to higher-risk altcoins.
Bitcoin’s dominance grows as Altcoin trading activity declines
Altcoin trading activity has weakened noticeably during the current recovery phase, reinforcing a broader shift towards a defensive position in the cryptocurrency market. According to a recent one analyst According to our assessment, Bitcoin trading volume on Binance regained its dominance on February 7, accounting for approximately 36.8% of total exchange activity. This leadership has continued since then, suggesting that investors continue to prefer the relative stability and liquidity associated with Bitcoin in uncertain conditions.
In comparison, altcoins accounted for approximately 35.3% of total trading volume, while Ethereum accounted for approximately 27.8%. While these numbers still reflect significant participation, altcoins have experienced the sharpest decline in activity. In November, altcoins accounted for approximately 59.2% of Binance’s trading volume, but by February 13, their share had dropped to approximately 33.6%, representing a nearly 50% decline in market share.
Similar patterns have emerged during previous recovery phases, including April 2025, August 2024, and slow 2022, at the end of the previous bear cycle. Periods of increased uncertainty tend to drive capital towards Bitcoin, which continues to function as the sector’s main liquidity anchor. This recurring rotation highlights Bitcoin’s role as a perceived safer crypto asset as volatility increases and speculative appetite decreases.
Altcoin market capitalization weakens as risk appetite remains confined
Total cryptocurrency market capitalization excluding the top 10 assets continues to reflect continued weakness, highlighting the brittle state of the broader altcoin segment. After peaking near 2025 highs, the indicator has entered a sustained correction phase, with recent price action hovering around the $170-180 billion range. This zone has proven to be an initial support area, but the lack of a powerful rebound suggests that risk appetite remains confined for smaller-cap assets.
Technically, the structure shows the altcoin market trading below key moving averages, indicating that momentum continues to favor sellers. Previous recovery attempts have repeatedly stalled near active resistance, reinforcing the view that capital rotation towards mainstream assets – particularly Bitcoin – continues to dominate market behavior. Increased volatility during recent declines also indicates brittle liquidity conditions.
Volume dynamics additionally confirm this cautious interpretation. The spikes in sales activity have been accompanied by a recent decline, suggesting distribution rather than accumulation. While there appears to be stabilization in the compact term, there is confined evidence that sustained investor flows will return to altcoins.
Historically, similar setups have often been preceded by prolonged phases of consolidation rather than immediate recovery. Unless broader market liquidity improves or Bitcoin’s dominance wanes, the altcoin market may remain structurally constrained despite occasional short-term bounces.
Featured image from ChatGPT, chart from TradingView.com
