The other major altcoin, Ethereum, the second largest cryptocurrency, had a similar collapse this year. This collapse is hitting the whole altcoin market hard as Bitcoin’s dominance reaches new highs. Ethereum’s price and network activity has recently experienced a deep decline. This drop and declining transaction fees indicate a bearish trend for altcoins in general. Bitcoin’s dominance has risen to 63.8%, signalling an ongoing preference for the crypto market’s leading currency at the expense of its altcoin rivals.

Ethereum’s price is untethered from that high all the way down by 56.6%, from $3,744, marking a massive erosion of investor faith. This sudden drop is not a stroke of luck, as network activity on the Ethereum blockchain has dried up as well. The resulting drop in transaction fees—great for users, we readily agree—is a sign of lower demand for block space as well as smart contract interactions.

Bitcoin’s recent surge has only added insult to injury for altcoins. Bitcoin’s share of the total cryptocurrency market has jumped to 63.8% dominance. While this level offered support for prices in early 2020, rising to meet prices now poses a difficult task, acting as resistance in 2024. Speculators aren’t the only ones piling into Bitcoin. Investors are sending a clear signal that they prefer Bitcoin. They view it to be the safer and more proven store of value.

The altcoin seasonality index is at 20 right now, which further confirms that it’s still Bitcoin season. As you might have realized over the last 90 days, a majority of the top crypto assets have underperformed Bitcoin. This trend further underscores the impressive relative strength of Bitcoin. In order for altcoins to prove they are strong enough to last, they must overcome the final lower high at $780 billion.

The recent streak of daily declines since the start of the year has only chipped away at already low confidence in Ethereum. As investors are risk averse, Bitcoin continues to be the safe haven. This optimism is undoubtedly assuaged by the flow of capital, as Bitcoin seems to be stealing the lion’s share of all investment.

The stellar recovery taking place in the crypto market over the last two weeks is too positive to dismiss. Temper your excitement. So even if the market has recovered some, beneath that surface, the trend remains bullish for Bitcoin. Given Ethereum’s struggles thus far and Bitcoin’s obvious flywheel of continued dominance, altcoins seem likely to continue facing headwinds.

Ethereum’s drop acts as a bearish sign for the broader altcoin market. As the second biggest altcoin by far, Ethereum has a significant influence on the market and its performance generally determines the trend of the market. With it currently suffering struggles of its own, this introduces further reason to worry for the health and future prospects of altcoins.