Matrixport: Altcoin Rally Remains Unlikely As Ethereum’s Dominance Dips 50% And Bitcoin Faces Liquidity Challenges

Cryptocurrency financial services company Matrixport released a market analysis noting that since the launch of Ethereum Spot exchange-traded funds (ETFs) in the US last summer, Ethereum’s market dominance has fallen by nearly 50%. If Ethereum is seen as the “oil” driving the cryptocurrency economy, then the current state of the market resembles a deep recession. However, Ethereum is not the only altcoin losing ground to Bitcoin. Over the past year, many altcoins have seen their narratives rise and fall, with tokens like Dogwifhat, Virtual Tokens, and Donald Trump-themed coins following a familiar pattern of sharp, euphoric rallies followed by equally sharp declines, creating pyramid-like price structures, the firm noted. 

Matrixport points out that for a sustained Bitcoin rally to happen, there must be a catalyst in the form of one of three liquidity types: dovish Federal Reserve signals or rate cuts, micro-liquidity such as stablecoin growth and increased futures leverage, or macro-level liquidity like money supply growth or government-driven stimulus. Historically, altcoins have seen meaningful growth only during periods of abundant liquidity. For altcoins to gain upward momentum, there would need to be increased demand driven by real-world use cases or a surge in liquidity similar to the 2020-2021 cycle, but, according to Matrixport, indicators suggest a large liquidity influx into the market is unlikely, making an altcoin rally improbable in the near term. 

Fed Expected To Hold Rates Steady Amid Inflation Concerns, Bitcoin Remains Stable In $80K-$90K Range 

The US Federal Reserve is expected to keep interest rates unchanged through the summer as it evaluates the inflationary effects of proposed tariffs from Donald Trump. Although markets are pricing in four rate cuts for 2025, Federal Reserve Chair Jerome Powell has emphasized caution in evaluating the impact of these proposals.

Recently, the minting of stablecoins has sharply declined, supporting the view that Bitcoin will likely stay in the $80,000 to $90,000 range for now, with little room for speculative activity. Trading volumes, including in Bitcoin ETFs , remain low, indicating limited market interest, as investors are more focused on their underperforming equity portfolios amidst Donald Trump’s trade negotiations and attempts to reshape the global order, which have placed additional pressure on markets.

This has weakened the US dollar, and as the global money supply is often measured in USD terms, a weaker dollar can inflate the money supply, which has historically supported Bitcoin prices. Despite past concerns over regulatory crackdowns or outright bans on Bitcoin, those risks have diminished, which helps explain why Bitcoin is faring better in the current correction compared to previous cycles.

At the time of writing, Bitcoin is priced at $84,729, reflecting a slight decline of 0.03% in the last 24 hours, with its highest value reaching $85,426 and its lowest at $83,816.

Meanwhile, the global cryptocurrency market capitalization stands at $2.67 trillion, showing a 0.03% decrease over the past 24-hour period. The total market volume for cryptocurrencies in the last day is $58.49 billion, marking a 21.31% decline, as reported by CoinMarketCap.