Bitcoin Dominance Rises 62.2% as Altcoins Plunge 55.2% in Q1 2025

In the first quarter of 2025, the digital asset market faced significant challenges, with macroeconomic issues overshadowing initial optimism driven by a pro-crypto U.S. president and anticipated regulatory improvements. Bitcoin reached a new all-time high of $109,356 but ended the quarter down 11.6%, marking its second-largest quarterly decline since Q2 2022. Altcoins experienced even steeper declines, with indices like the CoinDesk Memecoin Index and the CoinDesk 80 falling by 55.2% and 46.4%, respectively.

Despite these challenges, a fundamental shift is occurring within the crypto market. Institutions are increasingly influencing capital flows, favoring liquid and regulated large-cap assets. This trend is pushing the market toward more structured, benchmark-driven strategies. Bitcoin dominance, which measures bitcoin’s total market capitalization as a percentage of the total crypto market cap, rose to 62.2% in Q1, its highest level since February 2021. This increase occurred despite a 26.9% drop in bitcoin’s total market capitalization from its January peak, indicating a rotation of capital from speculative assets into bitcoin as macro volatility and geopolitical uncertainty increased.

The CoinDesk 20 Index (CD20) provides a clear view of this institutional shift. While the index fell 23.2% in Q1, it outperformed most major digital assets. XRP was the only CD20 constituent to post a positive return, rising 0.4% in the quarter. This was driven by the dismissal of the SEC’s case against Ripple and strong growth in its RLUSD stablecoin, which saw its market cap surge 323% to reach $245 million. By contrast, ether fell 45.3%, underperforming most major assets amid continued migration of user activity to Layer 2s and a lack of positive catalysts. U.S. spot ETH ETFs saw net outflows of $228 million in Q1, compared to net inflows of over $1 billion for bitcoin ETFs. The ETH/BTC ratio declined to 0.022, its lowest level since May 2020, reinforcing the shift in relative dominance this cycle.

Bitcoin’s role as a macro asset continued to gain traction. Public companies added nearly 100,000 BTC to their holdings in Q1, representing a 34.7% increase. This brought the total held by such companies to 689,059 BTC, equivalent to more than $56.4 billion at current prices. The launch of the U.S. Strategic Bitcoin Reserve and the introduction of a broader Digital Asset Stockpile by the Treasury further underscored bitcoin’s growing legitimacy within U.S. policy.

Looking ahead to Q2, market sentiment has improved following the recent pause in new tariff measures. Risk assets responded favorably, and optimism for altcoin ETFs remains high. Nearly 40 spot ETF applications for altcoins were submitted in Q1 alone, led by those for Solana and XRP, which each had eight filings. Other assets applying for spot ETFs included Litecoin, Dogecoin, and Polkadot. With Solana futures now live on the CME, the precedent for institutional-grade altcoin exposure continues to build.

The first quarter offered a reminder that digital assets are no longer moving in isolation. As macro conditions evolve and policy shifts begin to reshape the regulatory environment, capital is consolidating into assets with deeper liquidity, stronger narratives, and institutional relevance. Bitcoin’s rising dominance, shifting ETF flows, and the fragmentation of altcoin performance all point to a market recalibrating around structural factors rather than sentiment alone.