The cryptocurrency market’s long-standing formula — the “altcoin season” — is vanishing. Historically, after Bitcoin rallied, liquidity would sequentially flow into Ethereum, large-cap altcoins, and then mid-to-small-cap tokens, triggering a broad-based surge. However, since the U.S. approved Bitcoin spot exchange-traded funds (ETFs) in 2024, institutional capital has become the core driver of market supply and demand, radically transforming the investment landscape. Instead of a rising tide lifting all boats, a “selective bull market” has emerged, where only projects with actual revenue and cash flow command attention.
According to the digital asset industry on June 30, the traditional pattern of capital rotating from Bitcoin into altcoins after a rally has weakened markedly. This is because institutional funds flowing in via ETFs translate into actual Bitcoin purchases by asset managers, creating a structure where capital stays in the market for the long term. Unlike retail investors who previously recycled Bitcoin profits into altcoins, institutional money remains parked in Bitcoin, further reinforcing its market dominance.
Indeed, BTC Dominance (BTC.D), which measures Bitcoin’s share of the total digital asset market capitalization, has recently held at elevated levels around 59%. CoinMarketCap’s Altcoin Season Index also remained at 43 as of the 26th. Given that a reading above 75 is typically interpreted as altcoin season, market leadership remains firmly concentrated in Bitcoin.
The underperformance of Ethereum (ETH), the flagship altcoin, starkly illustrates this shift. According to crypto data platform Coinglass, Ethereum has fallen over 20% this month and is increasingly likely to post negative returns for three consecutive quarters for the first time in its history. In global markets, Ethereum was trading around the $1,550 level at the end of June, representing a nearly 68% collapse from its all-time high of roughly $4,950 recorded in August 2025. This decline is far steeper than Bitcoin’s approximately 52% drop over the same period. On the 26th, Ethereum briefly suffered the indignity of losing its number two market cap ranking to the stablecoin Tether (USDT).
Industry participants analyze that this trend is not merely a signal of a bear market, but evidence that the very criteria for investment have fundamentally changed.
Bok Jin-sol, Research Lead at Popillus, diagnosed the shift: “In the industry’s early days, projects with almost no revenue could persuade investors based solely on new narratives like play-to-earn (P2E) gaming or crypto AI. But now, it has been confirmed that many of those past experiments were unsuccessful, and the emergence of projects generating massive revenue — such as Hyperliquid (HYPE) or Pump.fun — has shifted the market’s valuation benchmark toward actual performance.”
She added, “Currently, projects with real cash flow and business viability are attracting attention. Prime examples include decentralized perpetual exchanges (Perp DEXs), DeFi protocols that have secured market share, and real-world asset (RWA) tokenization platforms that have built economies of scale.”
Kim Jun-seong, Senior Researcher at CrossAngle (Xangle), concurred: “Compared to the past, when all altcoins rose together, the recent market is increasingly characterized by selective investment flows that scrutinize actual use cases, revenue, regulatory compliance, and token value accrual structures.” He noted, “We are particularly positive on the RWA and AI sectors. The RWA market is seeing growth in the scale of tokenized assets and an increasing number of integration cases with traditional financial infrastructure.” However, he cautioned, “Project growth and token price appreciation are separate matters. Structures that accrue value to token holders, such as buybacks or revenue sharing, will become even more critical.”
The new investment criteria that market participants are focusing on can be summarized in three points. First is the ability to generate actual revenue and cash flow. Leading examples include decentralized perpetual exchanges like Hyperliquid and Lighter, as well as DeFi protocols with established market share such as Uniswap (UNI) and Jupiter (JUP). Second is regulatory compliance and the potential for integration into the institutional framework. Third is a clear structure for accruing value to token holders — specifically, buyback or revenue distribution mechanisms.
Ethereum is bearing the direct brunt of these changes. Ethereum spot ETFs recorded net outflows of approximately $273.34 million over the past week, revealing weak demand. Furthermore, high-performance blockchains like Solana (SOL) are absorbing meme coin and high-frequency trading culture, eroding Ethereum’s share of on-chain activity. Compounding this, reduced gas fees have decreased the token burn rate, weakening the “Ultrasound Money” store-of-value narrative.
Choi Dong-min, an analyst at Shinhan Securities, forecasts that a selective rally centered on a handful of projects will persist for the time being, rather than a broad market upswing. “We can only judge that overall market risk appetite has recovered once we see a simultaneous resumption of net inflows into Bitcoin spot ETFs, an increase in trading volume, and a decline in BTC Dominance,” he said. “Until then, it is advisable to maintain a defensive strategy centered on Bitcoin and selectively approach certain altcoins with individual momentum, such as AI, prediction markets, and security infrastructure.”
Meanwhile, a significant counterargument suggests that Ethereum’s extreme undervaluation could itself present a rebound opportunity. Ethereum still possesses the deepest DeFi ecosystem, RWA tokenization platforms, and Layer 2 networks, along with the strength of staking yield — a feature Bitcoin lacks. The logic holds that extreme market fear can serve as a bottom-fishing signal, and that Ethereum could become the leader in a late-cycle phase where capital rotates back into altcoins after Bitcoin Dominance peaks.
However, for such a reversal to materialize, several conditions must be met. A complex interplay of factors is required: capital rotation from Bitcoin ETFs to Ethereum ETFs, a deceleration in Solana’s momentum, and a macroeconomic recovery in risk-asset appetite. Above all, Ethereum’s price must reclaim the technical resistance zone of $1,700–$1,750 and break above the $2,000 level before a trend reversal can be anticipated.
