Bitcoin’s price is on the verge of breaking its all-time high, capturing the attention of the financial world. But while Bitcoin soars, the rest of the cryptocurrency market isn’t faring as well. Altcoins, which had previously contributed significantly to overall market gains, are lagging this time around. This trend has left the total cryptocurrency market cap $500 billion short of past peaks, underscoring a widening gap between Bitcoin’s growth and the rest of the crypto space.

Bitcoin Dominates the Crypto Market While Altcoins Stumble

During the last major Bitcoin rally in November 2021, the total crypto market capitalization reached close to $3 trillion, as altcoins like Ethereum (ETH) and Solana (SOL) joined Bitcoin in climbing to new heights. This year, however, the landscape is different. As of this week, the total crypto market cap sits around $2.5 trillion. The lackluster performance among altcoins is holding back the broader market, even as Bitcoin itself inches towards price discovery.

Bitcoin’s steady rise has boosted its market dominance to over 60%, a level it hasn’t reached since early 2021. Analysts note that this surge in Bitcoin’s market share is primarily driven by institutional interest, with large-scale investments flowing into Bitcoin-focused exchange-traded funds (ETFs) over the past few weeks. The rise of these ETFs is drawing money away from smaller coins and consolidating it into Bitcoin, leading to a steeper imbalance in the crypto market.

Ethereum and Other Altcoins Lag Behind

One of the most noticeable changes in this cycle is Ethereum’s underperformance. In 2021, Ethereum’s market cap hit $570 billion as it reached an all-time high price of $4,878. During a brief rally in March of this year, ETH’s market cap again surged, approaching $490 billion. Currently, however, Ethereum’s value stands at just $317 billion, a significant drop from its peak. Resistance at the $2,650 mark has prevented Ethereum from gaining ground, which has in turn dampened the performance of the broader altcoin market.

The decline isn’t limited to Ethereum. Major altcoins like Solana, XRP, Dogecoin, and Cardano have all fallen sharply from their highs. For instance, Cardano’s market cap is down a staggering 88% from its peak, while Dogecoin has fallen 76%. High-profile tokens like Polkadot (DOT) and Shiba Inu (SHIB) are also down more than 90% from their peaks, signaling a lack of momentum across the board for these popular coins.

The only major exception among the altcoins is Binance Coin (BNB), which is just 16% shy of reaching its previous record price. However, even BNB’s performance hasn’t been enough to make a noticeable difference in the overall altcoin market trend.

Why Are Altcoins Struggling This Time?

Several factors have contributed to the current trend in the crypto market. A primary reason for the shift is the rising dominance of stablecoins and institutional interest in Bitcoin ETFs. Stablecoin capitalization has grown significantly, currently standing at $177 billion, up from around $120 billion in 2021. As more funds are directed into stablecoins, there is less liquidity available for speculative altcoins, which has added to the slow growth.

The surge of Bitcoin ETFs has also played a role in shifting focus from altcoins to Bitcoin. Just this past week, U.S. spot Bitcoin ETFs saw record-breaking inflows, including over $870 million flowing into BlackRock’s iShares Bitcoin ETF (IBIT) alone. This institutional enthusiasm has resulted in a large-scale transfer of funds from other parts of the crypto market into Bitcoin, causing the altcoin market to stall.

Bloomberg ETF strategist Eric Balchunas recently noted that these inflows have been driven by “fear of missing out” (FOMO) as investors rush to buy Bitcoin before it potentially surpasses its all-time high. If this trend continues, Bitcoin could soon be on a parabolic rise, further increasing its dominance and leaving altcoins trailing.

What’s Next for Altcoins?

While some analysts believe an “altseason” could be on the horizon, this shift may only occur if retail investors start pouring into the market. In previous Bitcoin bull runs, retail investors played a crucial role in driving demand for altcoins, which in turn pushed the entire market higher. However, retail FOMO appears to be absent this time, possibly due to economic uncertainties or a preference for lower-risk investments.

Until retail investors re-enter the market or institutional interest expands to include more altcoins, Bitcoin will likely maintain its lead, with altcoins struggling to regain their former highs. For now, Bitcoin’s continued climb seems inevitable, but the rest of the crypto market remains subdued as investors weigh the potential risks and rewards.