Bitcoin's dominance falls to 55%! The altcoin rotation horn sounds, with Ethereum and Solana welcoming capital inflow?

The market dominance of Bitcoin (BTC) has fallen from this year's peak of 62% to 55%, a change that is seen as an important signal of capital rotation in the crypto market. Historical experience shows that when BTC's dominance declines, capital often flows into higher-risk, higher-potential-return altcoins, opening up upward space for assets like Ethereum (ETH) and Solana (SOL).

BTC Dominance: A Barometer of Market Sentiment

(Source: The Block)

Bitcoin's dominance measures the proportion of BTC's market capitalization relative to the total market capitalization of the crypto market.

High dominance: Investors prefer Bitcoin's "safe haven" attribute, with low market risk appetite.

Low dominance: Funds seeking high-risk, high-reward opportunities in alts, with an increase in market risk appetite.

A drop of 700 basis points from the cycle high means that funds are gradually flowing from BTC to other crypto assets, especially as we enter the fourth quarter, this trend is a positive signal for alts.

Ethereum and Solana: Early Beneficiaries of Capital Inflow

Recently, the trading activity of Ethereum and Solana has明显回升, driven by the Digital Asset Treasure (DAT) project.

Multiple teams are raising funds and acquiring assets through publicly listed companies to inject liquidity into the public blockchain ecosystem.

From the historical data of 2021/2022, BTC's dominance once fell below 40%, and at that time, altcoins experienced a massive bull market.

If the current market environment continues to favor risk assets, ETH and SOL are expected to become the leaders in this round of capital rotation.

55%: Market's "Transition Zone"

The current 55% dominance level indicates that the market is in a critical transition phase:

1. Altcoins can start to build up a pump.

2. However, it has not yet entered the extreme speculation "frenzy phase".

This provides a relatively healthy entry environment for long-term investors, while leaving room for short-term traders to operate in waves.

Key Variable: Can Spot Demand Take Over?

Although leveraged trading in the derivatives market brings short-term momentum to altcoins, what truly determines the sustainability of the market is the real demand in the spot market.

Institutional funds are pouring into digital asset government bonds and ETF products.

However, whether these funds can be converted into direct token purchases remains uncertain.

If the spot demand cannot keep up, the rebound of altcoins may turn into a temporary "capital game."

Conclusion

Bitcoin's dominance has dropped to 55%, signaling a rotation in the altcoin market. Ethereum and Solana have already shown signs of capital inflow, but whether they can maintain the pump depends on whether the real buying pressure in the spot market follows suit. For investors, this may be a golden prelude to positioning in alts, but it is also a critical moment that requires careful observation.