BTC dominance, which shows the share of Bitcoin market cap in the total crypto market cap, exceeds 60%. Meanwhile, ETH dominance has recently fallen below the 10.5% level. What’s going on and what to expect from ETH in the near term?
Back in 2017, ETH reached the peak of its relative strength compared to other coins. At that time, its crypto market share exceeded 31%. ETH was the key symbol of the word ‘altcoin’ in those early days of crypto adoption, and many crypto investors chose ETH as their first non-Bitcoin purchase.
In 2024, ETH dominance peaked near the 18.5% level in February. Since then, ETH dominance has been trending down and ultimately fell below 11%. Let’s take a look at the key catalysts behind this trend.
The key problem for ETH is the sharp increase in the supply of altcoins in the market. There are millions of them available to investors. Most of those coins have no real value, but interesting new projects appear regularly, drawing investments towards themselves.
In addition, established crypto projects like XRP and SOL continue to fight for market share and aim to displace ETH. A growing number of alternatives makes it harder for ETH to maintain its market share and stay in the top-2 list.
The problems of the NFT market, which has once provided significant support to the price of ETH, have also put pressure on Ethereum. The number of newly minted NFTs has collapsed since the peak of 2022, and there are no signs of any recovery in this market. Strong NFT sales were once considered a significant positive catalyst for ETH, so it’s not surprising to see that Ethereum investors are not happy with the dynamics of the NFT market.
The creation of spot ETFs on Ethereum has provided some support to the coin. However, demand from investors who buy such products on traditional markets has been mostly focused on spot ETFs on BTC. Therefore, the creation of spot ETFs on ETH did not serve as a major catalyst for Ethereum as demand was limited.
Overall, ETH lacks a key driver that could have provided sustainable upside. In this situation, ETH is in the hands of general market sentiment. The recent sell-off, which pushed the price towards the $2050 level, highlighted the lack of strategic buyers. The sell-off was caused by the panic during the Asian session, when traders were worried about Donald Trump’s tariff initiatives. The strong pullback was fundamentally unjustified so investors have quickly bought the dip, but long-term holders have surely experienced unpleasant moments.
What could be a trend-changer that provides ETH with sustainable upside momentum? Most likely, the market will wait for the Pectra upgrade, which is expected to take place in March. If the upgrade coincides with the continuation of the bull phase of the crypto market, ETH will have a decent chance to gain strong momentum.