In early 2026, altcoin dominance is rising despite Bitcoin's continued decline, testing the $70,000 support level. On-chain data indicates a shift towards "High-Utility" sectors, particularly AI-integrated blockchains and Layer-2 solutions, which are showing positive weekly rate-of-change metrics. This trend mirrors a similar divergence seen in late 2020, where a peak in Bitcoin dominance led to a significant rotation into DeFi and NFT ecosystems. Analysts note that while Bitcoin has been on a downward trajectory for five months, altcoins are gaining ground, defying typical bear market patterns. This anomaly suggests a potential altseason, driven by innovation in sectors like decentralized AI and memecoins. However, caution is advised as external factors could still impact market dynamics.