Bitcoin’s dominance in the cryptocurrency market is steadily increasing as 2025 comes to a close, reflecting a growing trend where retail investors are moving away from altcoins and reassessing their portfolios in favor of established assets like Bitcoin and Ethereum. In a recent market update from Wintermute, this shift illustrates the end of expectations for an altcoin rally that usually follows strong performances from Bitcoin.
Throughout the previous week, the cryptocurrency market has exhibited significant volatility. Bitcoin experienced a decline of 1.12%, dipping below $87,000, while Ethereum saw a 1.5% drop, nearing the $3,000 mark. A particularly telling development was observed in the non-fungible token (NFT) sector, which suffered notable declines exceeding 9% amidst shifting market sentiment and a lack of appetite for short-term risks.
The preceding week was marked by a series of liquidations totaling around $600 million on Monday alone, followed by $400 million each on Wednesday and Thursday as market conditions prompted swift exits from leveraged positions. Although Bitcoin made a gradual recovery towards $90,000 by week’s end, the overall price action remained constrained, limiting investor confidence.
Notably, perpetual open interest dropped by $3 billion for Bitcoin and $2 billion for Ethereum overnight. This decrease leaves markets exposed to rapid fluctuations as traders prepare for the upcoming holiday season. Internal data from Wintermute indicates a resurgence of buying pressure for major assets, underpinned by consistent institutional support observed since the summer.
At present, retail traders appear to be pulling back from altcoins, coinciding with a broader consensus that Bitcoin must lead the market for any sustained upward movement to occur down the capitalization scale. Wintermute posits that with liquidity thinning and market participants winding down operations into the year-end, the trading environment will likely continue to exhibit volatility, particularly given the current appetite for risk.
The overall market remains range-bound, characterized by limited liquidity and abrupt price movements as leverage exits are swiftly realized. Bitcoin and Ethereum are functioning as the primary bulwarks against market volatility, while altcoins suffer under significant supply pressure. Funding rates and basis points among major cryptocurrencies have remained stable through recent sell-offs, even as options markets continue to signal heightened volatility expectations.
A recent analysis by Galaxy Research brings additional context to Bitcoin’s market performance, revealing that when adjusted for inflation to 2020 dollar values, Bitcoin has yet to surpass the $100,000 mark, topping out instead at approximately $99,848 in those terms during its peak.
In light of these recent fluctuations, traditional financial entities are showing continued interest in the crypto space, potentially laying the groundwork for future growth. For example, Bitmine has expanded its treasury by acquiring an additional 67,886 ETH valued at $201 million, raising its total December acquisitions to about $953 million.
However, despite these developments, Bitcoin and Ethereum exchange-traded funds (ETFs) have seen negative net flows since early November, indicating reduced institutional involvement amidst tightening market liquidity. In a notable recent trend, Bitcoin ETFs experienced outflows totaling $650.8 million over four days, spearheaded by BlackRock’s Bitcoin ETF, which noted a staggering single-day outflow of $157 million. Additionally, Ethereum spot ETFs reflected a net outflow of $95.52 million without any inflows across the board.
Looking ahead, market analysts like Farzam Ehsani, co-founder and CEO of VALR, present two potential scenarios for the crypto market as it heads into 2026. One scenario suggests that large players could be strategically positioning themselves in advance of a renewed accumulation phase, while the other indicates the market may be experiencing a more profound reset influenced by macroeconomic factors and the policies of the Federal Reserve.
Meanwhile, David Schassler, head of multi-asset solutions at VanEck, remains optimistic about Bitcoin’s potential performance in the upcoming year, suggesting that its current underperformance relative to the Nasdaq 100 Index may set the stage for stronger returns in 2026. Ehsani predicts that Bitcoin could revisit the $100,000 to $120,000 range by the second quarter of 2026, but he cautions that without the entry of new significant players, an altcoin revival appears unlikely, and any recovery might only revert to previous price levels.
