Bitcoin’s (BTC) decisive break above $118,000 has flipped the risk-on switch for crypto markets, and traders are now watching if altcoins follow with similar momentum or get left behind in a BTC-dominant rally.

Historically, bitcoin breaking to new highs acts as a liquidity signal, pulling sidelined capital back into the market and eventually rotating into large-cap altcoins.

The market is already seeing early signs of that dispersion, with ether (ETH) is testing its year-to-date highs, Solana’s SOL (SOL) reclaiming key levels above $160 and mid-cap tokens, such as Shiba Inu (SHIB), Hyperliquid's HYPE (HYPE) and Avalanche's AVAX (AVAX) seeing double-digit percentage increases in the past 24 hours.

“Bitcoin’s break above its all-time high is a liquidity signal that could rotate flows into other major crypto assets,” Rick Maeda, Research Analyst at Presto Research, said in a note to CoinDesk.

“Historically, when BTC sets a new high, it tends to propagate liquidity across the broader market. We’re already seeing signs of capital rotating into large-cap altcoins like ETH, SOL, and XRP, driven by renewed retail momentum and institutional rebalancing. Overall, the BTC breakout marks a regime shift, and we expect altcoin dispersion to rise from here,” Maeda said.

Solana remains the high-beta major token to watch on its retail-accessible, and narrative-heavy fundamentals. User activity on Solana-native protocols and token launches (like the recent memecoin wave) continues to keep liquidity flowing, Maeda noted.

XRP (XRP), often driven more by sentiment and speculative catalysts than fundamentals, is seeing fresh inflows as traders revisit legal clarity and historical correlations. With BTC volatility cooling, XRP and Cardano's ADA (ADA) tend to benefit from follow-through risk rotation.

Ethereum continues to benefit from a spike in ETF inflows and the broader expectation of institutional rebalancing. With spot ETH products gaining traction and L2 activity rebounding, it remains the most obvious beneficiary in a rising tide.

Jeff Mei, COO at BTSE, told CoinDesk. that “ETH could reclaim $3,200 soon,” with SOL “very easily returning to the $200 mark.”

“However this time around it looks like the market across the board is being uplifted. We can see major tokens such as SOL ETH, and XRP retracing their paths back to highs reached earlier in January,” Mei noted.

That view was echoed by Nick Ruck, director at LVRG Research: “As bitcoin hits a new all-time high at around $116k, altcoins are lining up to ride the bullish wave, with Ethereum ETF inflows hitting new volume highs while U.S. regulators removed a crypto broker tax rule, paving the way for DeFi to expand further.”

“Other blue-chip coins, including SOL and XRP, look to surge higher once Bitcoin volatility calms down and finds a new supporting price range,” Ruck said.

Read more: Bitcoin's Record Rally From $70K to $118K: A Tale of Transition From Wild West to Wall Street-Like Dynamics

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