Bitcoin’s market cap is shrinking relative to other popular cryptocurrencies as U.S. President Donald Trump continues to back away from his once-dizzying trade war. But that doesn’t mean “altcoin season” is around the corner, according to analysts.

They say that a recent pivot to risk-on assets that has buoyed Ethereum and other altcoins may not last amid ongoing macroeconomic uncertainties, and that investors could favor the safer-haven digital asset if volatility arises again. 

“When markets are focused on macroeconomic instability and risks to the U.S. dollar, Bitcoin’s dominance will likely rise,” Zach Pandl, head of research for crypto asset manager Grayscale, told Decrypt. “When markets are focused on all the applications of blockchain technology and the innovation happening in crypto, Bitcoin’s dominance will fall.”

As of Saturday, Bitcoin’s market cap stood above $2 trillion. Bitcoin dominance markers vary in how many coins they track, but they consistently show BTC at a four-year high compared to either major altcoins or the entire field.

TradingView data shows that among the top 125 cryptocurrencies by market cap, Bitcoin represents about 63.5 of that combined market value. Earlier this month, Bitcoin dominance reached 64.89 on that chart, representing its highest level since January 2021. CoinGecko data, by comparison, shows Bitcoin dominance at 60.4 compared to all other tracked coins on the market.

Over the past two weeks, Ethereum’s price has surged 36 to around $2,485, outpacing Bitcoin’s increase and making a small but noticeable dent in Bitcoin’s dominance, along with other altcoins that have also soared more than Bitcoin over this period. 

Ethereum was among digital assets crushed by Trump’s initial efforts to reshape global trade, with its price plummeting 45 in the first quarter and slipping below $1,500 in April, according to crypto data provider CoinGecko. 

Bitcoin has benefited from its portrayal as a non-sovereign asset like gold, while absorbing the bulk of capital flows into crypto through products like exchange-traded funds—which were approved last year—said Pandl.

During previous market cycles, Bitcoin’s dominance has fallen after its price peaks and traders rotate funds into altcoins that are further out on the risk curve—that was once the industry’s prevailing mythos, at least. However, spot Bitcoin ETFs could conflict with that dynamic, as products that don’t allow investors to reach for an alternative asset on-chain.

Within a range of to nine to 12 months, Bitcoin dominance is more likely to plateau around 60 to 70 of the overall market, as opposed to moving sharply lower, Pandl said. It’s a tough call, he added, considering Bitcoin and altcoin have distinct tailwinds that could both be in play.

“We are more or less equally bullish on Bitcoin for macro reasons, and altcoins for technological and adoption related reasons,” he said. “My working assumption is that we plateau from here.”

Juan Leon, senior investment strategist for crypto asset manager Bitwise, told Decrypt that Bitcoin’s falling dominance reflects investors’ increased risk appetite. Trump’s 90-day tariff pause, combined with lower inflation, is easing broader concerns about a slowdown in the U.S. economy, while lifting hopes of rate cuts from the Federal Reserve, he said.

Lower interest rates tend to benefit risk assets like stocks and crypto due to cheaper borrowing and increased liquidity. When the Fed slashed borrowing costs last year, crypto prices boomed, although that was before the election of America’s first “crypto president.”

Leon’s sentiment was echoed by Greg Magadini, director of derivatives for crypto data provider Amberdata, who told Decrypt that the market has been “having a huge rebound in risk-on assets all week, [and] that has been great for altcoins.”

Magadini noted that gold’s price has fallen as trade negotiations between the U.S. and China have progressed. Bitcoin, which “trades on a mix of risk-on and ‘digital gold,’” has therefore lost ground to altcoins, which “are a pure risk play,” he added.

Edited by James Rubin

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