Key Takeaways
Bitcoin decoupled from the S&P 500 as inflows lifted BTC and altcoins. Analysts warned ETH’s edge might fade as BTC retests resistance, with Cowen projecting renewed BTC dominance by October.
Bitcoin [BTC] and the S&P 500 continued to decouple as of press time. Historically, both assets tended to move in parallel, but the latest 1-day chart showed a clear divergence.
Bitcoin, shown in purple, has rallied upward, while the S&P 500 trended lower. Naturally, this hinted that capital rotation into the cryptocurrency was underway.
This renewed strength comes after Bitcoin’s weak performance in recent weeks. The asset had dropped from its all-time high of $124,000 to as low as $108,000 before attempting a breakout above the $110,000 resistance zone.
Source: TradingView
A familiar decoupling pattern
This was not the first time Bitcoin and the S&P 500 decoupled. Over the years, Bitcoin often outperformed equities.
According to Curvo, between 2020 and 2024, the S&P 500 outperformed Bitcoin only three times, notably during the 2022 decoupling. In that period, Bitcoin fell 62% compared to the S&P 500’s 13% decline.
On top of that, liquidity favored Bitcoin more recently. The asset gained 135% in 2024, versus the S&P’s 33%.
If capital inflows continued, Bitcoin could break above its current resistance. Having said that, analysts noted that altcoins may also benefit from this rotation.
BTC.D drops! Who really gains from it?
Altcoins appeared to be gaining from Bitcoin’s reduced dominance.
According to CoinMarketCap, Bitcoin Dominance [BTC.D], which measures Bitcoin’s market share against other cryptocurrencies, dropped 3.43% in the past day. Ethereum [ETH] captured the largest share of that liquidity, rising 2.17%.
Source: CoinMarketCap
In case of a continued decline in BTC.D, suggest that altcoins could extend their gains in the coming sessions.
However, analyst Ben Cowen offers a contrarian outlook. He believes Bitcoin’s dominance will rebound, benefiting Bitcoin while weighing on most altcoin pairs.
“I am bullish on ALT/ETH pairs in September. I am bearish on ALT/BTC pairs as BTC.D is bullish.”
Cowen explained that traders often mistook rising valuations against ETH for weakening Bitcoin dominance. In fact, BTC.D could still climb in that scenario, as altcoins might briefly outperform ETH while still losing ground to BTC.
He added that ETH could retest its 21-week EMA, giving alts a temporary edge, but momentum would likely fade once ETH/USD hit that level.
Standout performers still shine
At press time, the Altcoin 90-Day Index showed a handful of standout performers, even as many large-cap tokens post modest gains. Memecoins and mid-cap projects have led the rally.
Tokens like Pudgy Penguins [PENGU], Ethena [ENA], Conflux [CFX], Story [IP], and Chainlink [LINK] have maintained upward momentum, largely supported by strong fundamentals.
Of course, with capital rotation underway, large-cap altcoins were still likely to attract the heaviest inflows, as investors sought relatively safer bets.
