Is Ethereum’s Price Holding Back Alt Season?

• Ethereum: The Alt Season Kingmaker: Alt season kicks off when 75% of the top 100 altcoins outperform Bitcoin, but with 60-70% of these tied to Ethereum, its price performance is the real trigger. Whether it’s DeFi, stablecoins, or top protocols by Total Value Locked (TVL), Ethereum remains the backbone of the altcoin market. If ETH rallies, alt season is much more likely to follow.
• Bitcoin’s Grip: A Tough Barrier to Break: Bitcoin dominance is still above 60%, making it hard for altcoins to gain momentum. Historically, alt seasons only take off when Bitcoin dominance drops below 45%, but macro uncertainties—like Trump’s tariff wars—have kept investors clinging to BTC as a safe haven. Until liquidity rotates away from Bitcoin, altcoins will have a tough time staging a broad rally.
• A Different Kind of Alt Season?: The market is evolving, and so is alt season. Solana’s memecoin explosion, the rise of AI tokens, and the fragmented nature of recent rallies suggest we might see sector-driven mini-seasons rather than the everything-pumps euphoria of past cycles. With more projects than ever, blindly throwing money at alts won’t cut it—narratives, fundamentals, and timing will be key to capitalizing on the next big wave.

What Defines Alt Season?

Alt season is a term used in the cryptocurrency community to describe a period when altcoins (cryptocurrencies other than Bitcoin) significantly outperform Bitcoin in terms of price action. This phenomenon is generally measured using the Altcoin Season Index.

Altcoin Season Index: When at least 75% of the top 100 cryptocurrencies by market capitalization outperform Bitcoin over a period of about 60 to 90 days, it can be officially considered alt season. This index provides a quantifiable measure to gauge the market's trend towards altcoins.

Memecoin Consideration: While memecoins have been performing well in recent times, their presence in the top 100 by market cap is not significant enough to define an alt season. A memecoin run would more accurately be described as a "memecoin season" rather than a broad alt season.

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Ethereum's Central Role in Alt Season

Most of the projects within the top 100 by market cap are either part of the Ethereum ecosystem or are ERC-20 tokens; Around 60 to 70 of the top 100 cryptocurrencies are directly or indirectly linked to Ethereum. This includes direct Ethereum tokens like ETH itself, and numerous ERC-20 tokens that benefit from Ethereum's smart contract capabilities.

Ethereum's Health and Alt Season: With such a high representation, Ethereum's performance often acts as a catalyst for alt season. If Ethereum runs and is healthy, it can pull its ecosystem along, aiding in the conditions for an alt season.

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TVL Comparison

Some decentralized applications operate exclusively on a single blockchain, while others are designed to be compatible across multiple chains—much like how some video games are exclusive to a single console while others are available across platforms. However, whether chain-exclusive or multi-chain, the largest protocols by Total Value Locked (TVL) remain heavily concentrated on Ethereum. EigenLayer (restaking protocol), the largest Ethereum-exclusive protocol, holds a TVL of $12.3 billion, significantly outpacing Solana’s largest protocol, Jito (liquid staking protocol), which has a TVL of $3.15 billion. This nearly 4x gap highlights Ethereum’s dominance, even when compared to the leading protocols on other networks.

The trend extends beyond chain-exclusive protocols. Among multi-chain protocols, Lido (liquid staking protocol), the biggest by TVL at $26.76 billion, has 99% of its TVL on Ethereum, reinforcing Ethereum’s unparalleled influence in DeFi. Similarly, Aave (lending protocol), the largest lending protocol with a total TVL of $20 billion, has $17.15 billion—85% of its assets—on Ethereum, despite its integration across 13 different chains. Even as DeFi becomes more interoperable, Ethereum remains the primary settlement layer for the highest-value protocols.

While Ethereum continues to dominate DeFi protocols, things aren’t slowing down on the stablecoin front either. Stablecoins play a crucial role in crypto markets, acting as the primary medium for trading, lending, and liquidity provisioning. Despite competition from other networks, Ethereum remains the leading hub for stablecoin activity. USDT, the largest stablecoin by market capitalization at $136 billion (as of February 3, 2025), has $74.6 billion on Ethereum, compared to $61.4 billion on Tron. While Ethereum was the primary host of USDT until July 2022, Tron overtook it and led in stablecoin supply until mid-November 2024. However, post-November 2024, Ethereum regained the lead, signalling a reversal in dominance. This growing supply lead highlights Ethereum’s resilience and importance as the settlement layer for stablecoins, reinforcing its role as the backbone of decentralized finance.

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Ethereum vs. Solana: Ecosystem Comparison

Ethereum and Its Ecosystem: Ethereum remains the dominant smart contract platform, boasting a combined market cap of $652 billion with 1,336 listed projects, including 158 memecoins. Its expansive ecosystem serves as the foundation for DeFi, NFTs, stablecoins, and Layer 2 solutions, reinforcing its role as the primary blockchain for decentralized applications. Ethereum’s influence extends beyond its native projects, as many of the largest multi-chain protocols still allocate the majority of their Total Value Locked (TVL) to Ethereum, further cementing its position as the leading settlement layer.

Solana and Its Ecosystem: Solana, known for its high-speed, low-cost transactions, has emerged as one of the fastest-growing general-purpose Layer 1 blockchains, with a combined market cap of $350 billion and 1,160 listed projects. Notably, 630 of these projects—over half—are memecoins, highlighting the speculative nature of its ecosystem. This also explains why, despite Solana’s significant outperformance as an L1 in 2024, it primarily fuelled a meme season rather than a broad alt season. Expanding on this trend, Pump.fun, a Solana-based memecoin launchpad, generates over 5,000 new memecoins daily, though the majority fail to gain traction, emphasizing the high-velocity, short-lived speculative environment within Solana’s ecosystem.

Methodology and Data Considerations: The figures for Ethereum and Solana represent projects listed on at least one centralized exchange (CEX), making them moderate estimates compared to the actual number of projects in existence. The total number of memecoins across all chains is significantly higher. CoinGecko and CoinMarketCap—two of the largest crypto data aggregators—track nearly 5,000 memecoins, yet this still excludes thousands more that exist solely within decentralized ecosystems.

This methodology was chosen for simpler understanding and alignment with market tracking conventions, as TradingView’s Total 2 metric, which measures the overall altcoin market cap excluding Bitcoin, also primarily tracks assets listed on centralized exchanges. Total 2’s performance is widely used by traders as an indicator for alt season, with its chart movements often reflecting broader market sentiment. Total 2 is heavily weighted towards Ethereum and its ecosystem, making its price performance a key signal for the broader altcoin market entering an alt season. Historically, Ethereum has always led alt seasons, so it would be noteworthy to see one unfold with Ethereum taking a back seat.

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Conclusion

The narrative around alt season cannot be fully understood without acknowledging Ethereum’s significant influence. Ethereum’s robust ecosystem, with its high TVL in leading DeFi protocols, substantial stablecoin presence, and the sheer number of projects it hosts, sets the stage for what we call an “alt season.” While alt season can occur with or without Ethereum leading the charge, the health and performance of Ethereum remain key indicators for when the altcoin market might enter its prime. Some may argue that we’ve already witnessed elements of an alt season, albeit in fragmented waves. The memecoin frenzy last year and the AI token narrative, which gained traction from late 2024 into early 2025, both saw significant capital inflows and speculative activity. However, these could be classified as mini runs rather than a true alt season, as the major blue-chip altcoins—historically the defining players of an alt season—have yet to experience a broad and sustained breakout.

However, as of year-to-date (YTD) 2025, both Ethereum and Solana’s overall ecosystems have underperformed against Bitcoin in terms of price performance. Bitcoin dominance currently stands at over 60%, largely driven by macroeconomic uncertainties such as Trump’s tariff wars, which have spooked broader markets and risk-on assets. For a full-fledged alt season to materialize, Bitcoin dominance would likely need to fall below 45%, a level last seen in February 2023.

That said, optimism remains high for a potential Ethereum-led rally, which could act as a catalyst for alt season in 2025. Ethereum’s upcoming upgrades, continued Layer 2 adoption, and growing institutional interest provides strong tailwinds for its ecosystem. We have seen the likes of BlackRock's BUIDL and BlackRock's partnership with Securitize, both being infrastructures built on Ethereum's tech and security, as a few examples of institutional growing appetite. Additionally, Ethereum ETF staking could enable yield access as early as Q1, further strengthening its investment case. Meanwhile, Solana’s dominance in the memecoin sector and its emerging AI narrative could present a different kind of market dynamic, potentially creating new speculative opportunities. However, for Solana’s AI sector to play a meaningful role in shaping alt season, further development and adoption will be required.

Perhaps, given the staggering increase in the number of overall crypto projects, we may witness a different type of alt season than previous cycles. The phrase “a rising tide lifts all boats” may not apply as broadly this time, requiring more careful selection of investments. In past alt seasons, almost everything performed well, making everyone feel like a genius. However, as the market matures, so should our approach—prioritizing fundamentally strong projects over blind speculation may be key to capturing the real opportunities ahead.