Why Is Ethereum Weak While Bitcoin Is Rising? What Is Its Effect on Altcoins?

There is a remarkable situation in the crypto market recently: While Bitcoin (BTC) has caught a strong trend, Ethereum (ETH) is lagging behind it. This creates uncertainty and pessimism in the entire altcoin market.
Why Is This Happening?
Bitcoin's Rise: Bitcoin is setting new highs by leading the market. As investors turn to Bitcoin, which they see as a "safe haven", capital is being withdrawn from altcoins.
Ethereum's Struggle: Despite being the heart of areas such as DeFi and NFT, Ethereum cannot keep up with BTC. Reasons:
* Expectation and Reality: After major Ethereum updates (such as Pectra), prices may stagnate when market expectations are not met.
* Competition: Layer 2 solutions on Ethereum and other blockchains such as Solana and Avalanche divide ETH's activities and affect its price performance.
Why Are Altcoins Negatively Affected?
Ethereum’s weakness creates a vicious cycle for altcoins:

* Altcoin Indicator: Ethereum shows the overall health of the altcoin market. When ETH weakens, risk appetite for altcoins decreases.
* Liquidity Decrease: When capital flows into BTC or out of the crypto market, altcoins experience liquidity shortages and may experience steeper declines.
* Loss of Confidence: Uncertainty around Ethereum’s performance reduces investor confidence in all altcoins and leads to general pessimism.