During bull markets, Bitcoin (BTC) often leads the crypto market upward, with altcoins initially lagging before surging in a phenomenon called "altseason." Early in a bull cycle, investors flock to BTC as the "haven" of crypto, but as confidence grows, capital rotates into high-risk altcoins, which often outperform BTC in later stages.

In bear markets, BTC’s correlation with altcoins strengthens—both tend to decline, but altcoins usually fall harder due to lower liquidity and higher volatility. Major sell-offs see investors dumping altcoins first to preserve capital, causing "BTC dominance" (BTC’s market share) to rise. Stablecoins and Bitcoin become shelters.

However, exceptions exist:

Decoupling moments: Regulatory actions or ecosystem-specific news (e.g., Ethereum upgrades) can temporarily break correlation.

Stablecoin pegs or DeFi collapses (e.g., Terra’s crash in 2022) can cause altcoins to plummet independently.

Key Takeaway
Bull markets: Low initial correlation → high late-stage altcoin gains.

Bear markets: High correlation → altcoins drop faster.

Neutral phases: Altcoins often move inversely to BTC dominance.

Traders monitor BTC dominance charts to anticipate altcoin trends, as shifts in dominance signal changing investor risk appetite.