Funds have not yet significantly rotated into altcoins.

Written by: Prashant Jha

Translated by: Peggy, BlockBeats

Editor's note: After Bitcoin regained $80,000, the mood in the crypto market has warmed, but Fidelity's latest report cautions the market: this does not mean that the altcoin season has begun.

The report shows that current funds are still mainly concentrated on Bitcoin. Compared to higher-risk, less liquid altcoins, investors still prefer to allocate to assets like BTC that have stronger consensus. Mainstream altcoins like Ethereum and Solana, although showing stable on-chain activity, still exhibit weak price momentum, indicating that real usage has not translated into sustained buying pressure.

This is also the most critical divergence in the current market: Bitcoin has demonstrated strong resilience, but altcoins have not yet shown clear signals of fund rotation. In past cycles, altcoin seasons often occurred after funds overflowed from Bitcoin; currently, Bitcoin's market share remains high, and market risk appetite is still cautious.

Therefore, the focus of this article is not whether Bitcoin will rebound, but whether altcoins can truly catch this wave of emotional recovery. At present, the crypto market is stabilizing, but full recovery cannot be claimed yet. Bitcoin is still leading the way, while altcoins need to wait for clearer confirmation signals.

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TL; DR

• Fidelity's latest report shows that Bitcoin continues to outperform the market, while altcoins are constrained by weak momentum and insufficient fund rotation, performing under pressure.
• Although network activity remains stable, Ethereum, Solana, and the broader altcoin market still face pressure.
• After Bitcoin regained $80,000, market sentiment improved, raising the question: Will altcoins also experience a recovery?
• Bitcoin (BTC) remains the main support for the current crypto market.

Main Body

This is the clearest signal conveyed by the latest edition of Fidelity Digital Assets' "Signals Report." The report analyzes the digital asset market from dimensions such as market momentum, profitability, network activity, and capital flows.

Although cryptocurrency prices have stabilized after months of volatility, Fidelity believes that investor allocations are still highly concentrated in Bitcoin, with limited risk appetite for broader altcoin assets.

The report offers a relatively cautious judgment on the overall market. As the most liquid and solidly consensus-backed asset in the industry, Bitcoin continues to attract funds; meanwhile, many altcoins remain deeply entrenched in a long-term adjustment phase and have not yet exited the recovery cycle.

Altcoins remain trapped in a weak rotation environment

Fidelity's analysis indicates that the current market is still more cautious than speculative.

During the recent consolidation phase, Bitcoin's market share has remained strong. This suggests that investors still prioritize allocating to larger, more liquid assets rather than turning to higher-risk alternative assets.

Historically, rising Bitcoin market share often corresponds to altcoins underperforming Bitcoin, especially during times of high macro uncertainty.

The report specifically mentions Ethereum (ETH) and Solana (SOL). Fidelity points out that the momentum indicators for these two assets are still in a neutral to slightly negative range, while the unrealized profits for the entire altcoin market remain sluggish.

Despite relatively stable on-chain activity, price performance has mostly been stagnant. This divergence is worth noting. The network usage of Ethereum and Solana is more resilient than what price trends reflect, indicating that the actual utility at the protocol level continues.

However, Fidelity believes that solely relying on stronger usage data is not enough to attract sustained capital inflows into the altcoin market. On the contrary, investors seem more willing to concentrate their exposure in Bitcoin.

The report also emphasizes that since the end of 2024, the broader altcoin market has been in a difficult environment. Many small-cap assets have fallen significantly, while Bitcoin's performance remains relatively stable. Market liquidity outside of top assets remains weak. The report warns that unless there are substantial changes in momentum or market trends, altcoins may continue to face pressure for a longer period.

Fidelity did not directly predict that altcoins would face another large-scale sell-off. However, the report clearly states that the comprehensive expansion trend that many traders typically expect during late-cycle rebounds has not yet emerged.

Bitcoin as a clear anchor of market resilience

Although the report takes a cautious stance on altcoins, Fidelity's view on Bitcoin is notably more constructive. The firm describes BTC as the "anchor" of the market during the current consolidation phase. As investors seek liquidity and relative stability, funds continue to flow into Bitcoin.

Several indicators in the report support this judgment. Fidelity's "Yardstick" valuation model compares Bitcoin's market cap with network hash rate, currently showing that Bitcoin may be undervalued relative to historical levels.

Combining the recent price weakness with ongoing mining activity, Fidelity believes that the current price range shares similarities with past accumulation phases.

The report does not predict that Bitcoin will break through immediately. Short-term momentum indicators remain somewhat divided. However, Fidelity believes that Bitcoin's long-term investment logic has not changed, with supporting factors including liquidity characteristics, security model, and the increasing participation of institutions. The report concludes that as long as Bitcoin's market share remains high, BTC is likely to continue outperforming the broader market.

Bitcoin returns above $80,000, market sentiment changes

Since the report was released, market sentiment has begun to shift.

On May 5, during the Asian trading session, Bitcoin once again stood above $80,000, returning to levels seen earlier in the year. After holding around the $75,000 support in late April, Bitcoin rose to the $80,900 to $81,600 range, gaining more than 5% in just a few days.

This rebound has also driven some altcoin markets. Some high-risk assets have significantly risen alongside Bitcoin, while DeFi-related tokens and certain Layer 1 projects have also recorded strong short-term gains. Ethereum has similarly rebounded, but its relative performance continues to lag behind Bitcoin.

This surge has reignited market discussions: Is the long-awaited altcoin rotation finally about to occur?

However, at present, Fidelity's overall cautious judgment still looms over the market. The report emphasizes that momentum and capital flows remain concentrated in Bitcoin, and one short-term rebound does not necessarily mean the beginning of a sustained recovery cycle.

However, if Bitcoin can maintain above $80,000 and its market share stabilizes, the conditions for broader market participation to improve may begin to take shape.

The market is still waiting for confirmation signals

Overall, Fidelity's report reflects a market that is caught between stabilization and recovery.

Bitcoin continues to display resilience, further solidifying its role as a benchmark asset in uncertain times. Meanwhile, despite healthier underlying network activities, altcoins are still searching for stronger upward momentum.

The recent rebound has improved market sentiment, but the key for the next phase lies in whether funds will start rotating from Bitcoin to the broader market. Currently, the signals conveyed by Fidelity remain restrained: Bitcoin is still leading, while altcoins need to prove themselves.