“BTC’s Market Share Falls to 3-Year Low Amid Growing Decoupling From Altcoins.”

Bitcoin’s share of the total crypto market has fallen sharply, dropping by its largest weekly margin in over three years, as capital rotates into altcoins and BTC’s price correlation with the broader market weakens.

According to TradingView, Bitcoin’s dominance rate fell 5.8 percentage points in a single week, now sitting just below 61%—its lowest level since March. The decline marks the steepest weekly drop since June 2022, after topping out near 66% in late June.

During this period, the total crypto market capitalization expanded from $3 trillion to roughly $3.8 trillion, with altcoins like Ethereum (ETH) leading the rally. As Bitcoin stalled below $120,000, altcoins gained traction and captured investor attention.

Decoupling Signals Volatility Ahead

The weakening correlation between Bitcoin and altcoins has drawn concern among analysts, who view the shift as a precursor to increased volatility and potential liquidations in leveraged markets.

“The correlation heatmap is flashing a clear warning,” said research firm Alphractal in a Telegram update. “Average correlations between altcoins and BTC are rapidly declining, in some cases turning negative. Historically, such divergence often precedes intense market swings and widespread liquidations.”

Periods of low correlation between BTC and altcoins tend to coincide with aggressive rotation, uncertainty in risk positioning, and exaggerated market reactions to both bullish and bearish catalysts.

Retail Psychology and the Power of Unit Bias

Fueling the altcoin surge is a phenomenon known as unit bias—a behavioral tendency where investors prefer whole units of cheaper tokens over fractional ownership of high-priced ones.

With Bitcoin trading near all-time highs, many new and inexperienced investors are turning to lower-cost tokens such as XRP, DOGE, and memecoins, assuming they offer greater growth potential due to their low per-unit price. This perception, while often flawed, contributes to a shift in capital away from BTC, further eroding its market dominance.

Key Data Points

BTC Dominance: Fell 5.8% to under 61% — the largest weekly decline since mid-2022.
Crypto Market Cap: Rose from $3T to $3.8T in three weeks, led by altcoin performance.
BTC-Altcoin Correlation: Weakening rapidly; in some cases turning negative, per Alphractal.
Behavioral Shift: Unit bias continues to steer retail demand toward lower-priced altcoins.

Outlook

Bitcoin’s cooling momentum and declining dominance are likely to fuel further divergence in the crypto market. While altcoins benefit from increased flows and speculative interest, the breakdown in correlation may heighten systemic risk, especially for leveraged traders.

Investors should remain alert to rapid sentiment shifts and watch for signs of stress in high-beta altcoin sectors, as correlation regimes shift and volatility returns to the forefront.