The pullback followed higher-than-expected US consumer and producer price inflation readings, which tempered risk appetite across asset classes.
Until then, traders should expect range-bound conditions to dominate, with volatility shaped by incoming macroeconomic data.
In the current environment, altcoins remain more vulnerable than majors. Liquidity is concentrating in Bitcoin and Ethereum, while capital rotation away from higher-beta assets leaves smaller tokens exposed to sharper retracements.
This pattern is typical in the early stages of bull markets, where institutional inflows first consolidate in BTC and ETH before expanding into the broader market.
A decisive break above all-time highs in these majors would be the key catalyst for renewed inflows and broader strength.
Ethereum has played a critical role in setting the tone for digital assets. From April lows of $1,386.80, ETH climbed to $4,783.90 on August 14, less than 2% below its all-time high of $4,864.90. The advance reinforced Ethereum’s status as the primary liquidity driver outside Bitcoin, with its performance fuelling renewed speculation in altcoins.
The rotation is visible in Bitcoin Dominance, which has declined from 65% to 59% over the past two months. Historically, such declines in dominance have often coincided with periods of accelerating speculation across alternative assets.
While majors consolidate, capital continues shifting down the risk curve, a dynamic that may persist until a clear macroeconomic catalyst emerges.
