Bitcoin dominance rises to 58% as altcoins struggle, legacy tokens show strength

As of Feb. 3, Bitcoin's market dominance increased to 58.8% from its December low of 51%, while the total cryptocurrency market capitalization remains stable at $3.5 trillion.

The rise in dominance suggests a rotation of capital from altcoins to Bitcoin, with TOTAL2 (total crypto market cap excluding Bitcoin) declining from $1.6 trillion to $1.3 trillion. Bitcoin's price has maintained relative stability between $90,000-$100,000 since November 2024, indicating the dominance increase stems from altcoin weakness rather than Bitcoin's strength.

The last cycle’s legacy coins show renewed market strength against bitcoin. XRP, litecoin and LEO have outperformed Bitcoin with monthly gains of 19%, 10% and 7%, respectively, compared to bitcoin's 3.5% increase. This trend suggests a potential shift in investor preference toward cryptocurrencies with longer market histories and established follower bases.

Market fragmentation continues to increase as exchanges expand their offerings. Major exchanges like Coinbase and Kraken have each added approximately 100 new spot trading pairs in the last 12 months. The proliferation of token creation platforms, particularly Pump.fun, has contributed to liquidity fragmentation across the market as it is substantially cheaper to issue new speculative tokens.

Bitcoin's ability to maintain its market dominance without significant price appreciation remains a key consideration, particularly as legacy cryptocurrencies show renewed strength. The trend of established coins outperforming newer tokens could signal that retail investors are returning and buying tokens they are familiar with.

Meanwhile, the ongoing proliferation of new tokens through platforms like Pump.fun continues to fragment liquidity across the market as tokens compete for mindshare. The market's response to these evolving conditions, along with potential institutional capital flows, will likely determine whether current trends persist or shift in the coming weeks.