Bitcoin continues to drain and suppress the alt season! Institutions' "sticky holdings" break the cyclical pattern, while Ethereum's solo performance fails to change the market landscape.

The joint report by CEX and Block Scholes shows that Bitcoin's market capitalization share of non-stablecoin cryptocurrencies continues to rise, breaking the historical cycle rule of "alt season triggered 230 days after Halving" (the key Node was passed in December 2024 but no rotation has been seen). Currently, institutional funds are forming Sticky Holdings through channels like Spot ETFs, suppressing the flow of profit funds into alts. Although Ethereum has outperformed BTC this year (up 100% since April vs 40%), and Spot ETFs have attracted more capital than Bitcoin on multiple single days, it still hasn't triggered a global rotation. The sentiment in the derivation market has not yet reached a frenzy level, and the latency of alt season may become the new normal.

Bitcoin's Unusual Strength: Institutional Funds Reshape Market Logic

• Cycle Pattern Failure: Historical data shows that Bitcoin's market capitalization peak usually occurs about 230 days after the Halving, after which funds shift to altcoins, triggering a global bull market. However, in this cycle, the node (December 2024) has passed smoothly, and BTC's market capitalization has continued to strengthen, overturning traditional market perceptions.
• Institutional Holdings as a Key Variable: Corporate treasuries, pension funds, and others are making long-term investments through Bitcoin Spot ETF and direct coin holdings, which significantly reduce market volatility due to this "sticky capital." The report indicates that when the annualized return of BTC reaches 79% (far exceeding the 16% of the S&P 500), investors lack the motivation to shift to high-risk alts, creating a Bitcoin siphoning effect.

Ethereum Fights Alone: Local Victories Hardly Shake the Overall Situation

• **Triple positive support for independent market: **

1. Pectra Upgrade (Implemented in May) improves network performance.
2. The clarification of staking regulations in the United States reduces compliance risks.
3. Ethereum Spot ETF saw multiple single-day inflows exceeding BTC in July.

• The rotation engine is still lacking fuel: Although the ETH/BTC exchange rate has strengthened, it has failed to drive a broad rise in alts. The report suggests that if institutional funds continue to shift from BTC ETF to ETH ETF, combined with the advancement of tokenization policies and the launch of staking ETFs, it may eventually trigger a rotation of funds.

When will the alt season arrive? Two key signals are missing

• Derivation market remains calm: BTC and ETH futures have not shown the "euphoric positioning" typical before historical alt seasons, and market sentiment remains rational.
• Bitcoin's dominance remains strong: In the absence of a sharp decline in BTC market share or extreme leverage liquidation events, a comprehensive alt season remains a possibility rather than a certainty. The current landscape is more likely to continue the hierarchical market structure of "Bitcoin dominance, Ethereum second strongest, and alts differentiation."

Conclusion: The large-scale entry of institutional funds is profoundly rewriting the operational logic of the encryption market. Bitcoin, with its low volatility, high liquidity, and compliance advantages, continues to attract incremental funds, suppressing the traditional cyclical rotation of alts. Ethereum, supported by technological upgrades and ETFs, has managed to emerge with an independent market, but a single breakthrough is still insufficient to ignite a widespread frenzy. Investors need to adapt to the new normal of "BTC-ETH dual-core drive, structural opportunities in altcoins" and closely track the flow of spot ETF funds and regulatory policy trends—these two factors may become the final variables to break the current pattern.