Alt season bubble burst? Bitcoin and Ethereum dominate market pullback: the logic behind the $200 billion evaporation of blue-chip encryption assets.

The total market capitalization of Crypto Assets shrank from $4 trillion to $3.8 trillion this week, with a net outflow of $200 billion. Despite Bitcoin's dominance falling from 65% to 59% and Ethereum's dominance rising to 14%, the alt season index still dropped from 56 to 51, indicating that the market is still dominated by blue-chip assets such as BTC and ETH. This article deciphers the deep logic behind the concentration of institutional funds in top assets during this pullback through three dimensions: market capitalization gaps, fund flows, and historical patterns.

[Blue Chip Crypto Assets Dominating Market Pullback Pattern] Bitcoin and Ethereum, as blue-chip crypto assets, have shown significant dominance during this round of correction: Although BTC fell by 3.1%, it still maintains a market capitalization of $2.27 trillion, and while ETH has not broken through its historical high, its dominance has reached a new high since November of last year. Key data shows that the market capitalization gap between BTC and ETH has expanded from $750 billion four years ago to $1.865 trillion, indicating that in this cycle, Bitcoin's growth rate is 2.5 times that of Ethereum, completely breaking the market expectation that "alt season is about to start."

【The Capital Flow Behind the Four Failures of the Altseason Index】 The Altseason Index has fallen from a monthly high of 56 to 51, marking the fourth failure this year to break through 60. Although ETH dominance has strengthened in the short term, TOTAL2 (total market capitalization excluding BTC) plummeted by 4.56% this week, losing over $100 billion, while BTC's decline was only 3.1%. This confirms that funds are not flowing from BTC to altcoins, but rather are leaving the entire altcoin sector and reallocating to Bitcoin— the slight 2% drop in ETH dominance is clear evidence of funds flowing out of other altcoins.

[Bitcoin's Polar Star Position in the Market and Changes in Risk Appetite] The current market clearly shows a risk-averse characteristic: investors are shifting their positions from high-risk altcoins to blue-chip assets like BTC. Historical data shows that every time the alt season index approaches 60, it faces resistance, and funds eventually flow back to Bitcoin. In this cycle, although ETH has shown relative strength (dominance rising from 9.5% to 14%), its market capitalization is still far from the peak of $550 billion in 2021, while BTC has set a historical record of $2.4 trillion, confirming that the market is still operating on the "Bitcoin track."

[Conclusion] The hype around alt season is once again ahead of reality: ETH's rise has failed to drive the overall altcoin market, with blue-chip crypto assets continuing to dominate market discourse. Investors need to be cautious of short-term volatility risks in altcoins and pay attention to the strengthening trend of Bitcoin's dominance. If BTC dominance remains above 55% and the alt season index cannot effectively break through 60, the market may continue the differentiated pattern of "Bitcoin as the main player, Ethereum as a supplement, and altcoins stagnating." It is advisable to prioritize allocating to top assets to cope with uncertainty.