Ethereum's Market Dominance Drops to 8% Amid Bitcoin's Surge

Ethereum's dominance in the cryptocurrency market has plummeted to an eight-year low, standing at just 8%. This decline has been particularly pronounced since mid-2024, despite the overall bullish market conditions. The drop in Ethereum's market share is a stark contrast to its performance during the COVID-19 market cycle, when it managed to stage a sharp recovery in the second quarter of that year.

Ask Aime: "Will Ethereum's market dominance recover, and what factors will influence this trend?"

Currently, Ethereum's Relative Strength Index (RSI) remains in oversold territory, indicating that the cryptocurrency is trading at a two-year low. This technical indicator suggests that Ethereum's risk-off sentiment is elevated, suppressing fresh retail inflows and limiting its upside momentum. Given these conditions, a resurgence in Ethereum's dominance similar to that seen in 2020 appears unlikely.

Beyond technical metrics, there is a broader structural shift at play. Despite key catalysts such as post-halving capital rotations, the Trump rally, and the Federal Reserve's three rate cuts, Ethereum's dominance has continued to decline. These factors, which historically would have driven a recovery, have failed to ignite a meaningful rebound for Ethereum. As a result, Ethereum closed the year with a modest 47% annual gain, but its market dominance eroded by 4%, retracing to 12% by the fourth quarter of 2024.

This trend is further underscored by Bitcoin's surging market dominance, which increased from 54% to 61% by mid-Q4 2024. This shift propelled Bitcoin's total market capitalization near the $2 trillion milestone for the first time in history. The aggressive capital rotations into Bitcoin, fueled by macro-driven risk positioning and speculative front-running of a potential "Trump pump," highlight Ethereum's relative weakness.

Institutional demand for Bitcoin has dominated since March, while Ethereum ETFs continue to experience outflows, signaling weak conviction. As macro uncertainty deepens, institutional liquidity will dictate market stability, and Bitcoin is increasingly cementing its role as a risk-off asset. Meanwhile, Ethereum continues to lose market share, with its five-year dominance low reinforcing the narrative of persistent capital rotation away from ETH.