The cryptocurrency market is witnessing a significant power shift in May 2025 as Bitcoin’s dominance slides below 64%, triggering what analysts are calling the first altcoin season of the year. This rotation comes amid Ethereum’s 13% price surge and renewed institutional interest in proof-of-stake networks.
Bitcoin’s Retreat and Altcoin Opportunities
Bitcoin’s year-to-date gains of 10% pale in comparison to surging altcoins, with its market dominance dropping 4 percentage points since April. This decline has created breathing room for alternative cryptocurrencies, particularly those with strong ecosystem development.
Notable performers include:
- XRP: +12% YTD
- Solana: +18% weekly rally
- Cardano: +15% since May 1
Ethereum’s Comeback Story
The Ethereum network has reversed its bearish trend with a 13% monthly gain, fueled by successful implementation of EIP-4844 proto-danksharding. This upgrade has reduced layer-2 transaction fees by 60%, according to data from blockchain.news.
Despite being down 30% year-to-date, Ethereum’s resurgence suggests smart contract platforms could lead the next market phase. Network activity shows a 40% increase in daily active addresses compared to Q1 2025.
Tether’s Liquidity Dominance
Amid the volatility, Tether’s USDT has cemented its position as the market’s liquidity backbone. With a $150 billion market cap, the stablecoin now facilitates 75% of all crypto trades according to recent analysis from blockchain.news.
This liquidity concentration has drawn regulatory scrutiny but remains critical for altcoin trading pairs. Tether’s dominance highlights the market’s continued reliance on stablecoins during periods of high volatility.
Market Volatility and Trader Sentiment
Analyst AltcoinGordon warns of increased volatility in May, citing historical patterns and current funding rates. The Crypto Fear & Greed Index has swung from 35 to 58 in the past week, indicating rapidly changing market sentiment.
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The coming weeks could determine whether this altcoin surge represents sustainable rotation or a temporary market anomaly. With Bitcoin’s halving effects fully priced in and ETF flows stabilizing, capital appears to be seeking higher-beta assets – a trend that could accelerate if Ethereum ETFs gain regulatory approval later this quarter.
