As 2025 approaches its conclusion, investors are beginning to focus on the opportunities that 2026 may present. The emphasis is on the altcoin market, which has shown weaker performance this year. Historically, when Ethereum leads, it often initiates an altcoin rally. It appears that we are beginning to observe indications of that rotation. Since mid-Q2, ETH has been experiencing a downward trend relative to Bitcoin, resulting in a decline of the Altcoin Season Index to 33. However, late in the fourth quarter appears to be encouraging, with ETH/BTC possibly finding a bottom near 0.30, indicating a potential reversal.
Backing this up, Ethereum dominance is on the move. On a weekly basis, ETH.D has recorded three higher highs, approaching a resistance level of 13%. Meanwhile, Bitcoin dominance has been fluctuating below 60% over the same period, reinforcing the shift toward alts. Indeed, the Altcoin Season Index has not yet aligned with current trends. However, with ETH’s Q4 ROI now approaching BTC’s -18% decline, is this rotation more driven by Ethereum than by the overall market? Could this be an initial indication of the direction strategic investors may take in 2026?
The market continues to exhibit fragility, with support levels facing potential threats. BTC, for instance, continues its efforts to rebound from the decline experienced two months prior, which resulted in a 30% drop. Despite some “dip-buying”, BTC hasn’t fully recovered, indicating that caution continues to prevail in market sentiment. In this context, Ethereum’s weekly performance relative to Bitcoin may indicate a shift in investment strategies among informed investors. Supporting this observation, a significant player liquidated $132.5 million in BTC while acquiring $140.2 million in ETH in the last fortnight.
The rotation is clearly evident in the price action as well. Ethereum has surged approximately 15% in the last three weeks, surpassing Bitcoin’s 7% increase during the same period. The capital influx into ETH has exceeded 2x, evidently supported by whale rotation, as previously indicated. Institutional adoption is clearly on the rise, as evidenced by nine new partnerships that are integrating ETH into mainstream applications. This rotation appears to be a significant trend rather than a mere coincidence. Instead, it is forming a strong foundation for ETH’s 2026 performance against BTC.