The Connection Between Altcoins and Ethereum — To Understand Altcoins, You Must First Understand Ethereum
Yesterday, we talked about “Coinbase: Altcoin Season Is About to Fully Arrive, and Q3 2025 Will Be a New Turning Point for Capital Rotation.” In that article, we said, the market is like a stage. Bitcoin is the lead actor at the beginning — every move it makes determines the spotlight. But once the atmosphere heats up, it often steps aside and leaves the spotlight for the supporting actors behind it — the ones everyone calls “altcoins.”
But here’s the problem: not all of these “supporting actors” can become stars. The ones that can truly lead the charge often need a “big brother” type of character to hold up the stage. And that “big brother” is Ethereum (ETH).
In other words, the story of altcoins can never be told without Ethereum. To understand the relationship between altcoins and Ethereum is like studying a group of brothers’ stories in the underworld: only when the big brother takes the lead, can the younger ones show off their skills.
The “Growth History” of Altcoins: From Shadows to Ecosystems
If Bitcoin is “digital gold,” then Ethereum is more like a “digital factory.” Why?
Because Bitcoin’s narrative is very simple — anti-inflation, store of value, and value anchor. So, in the early crypto market, altcoins were basically Bitcoin’s “shadow.” Most projects were just small tweaks on Bitcoin’s code: some shortened block times, some increased total supply, some just changed the name and launched. Honestly, altcoins back then were more like “knockoff phones” — mainly copying, lacking differentiation.
But in 2015, Ethereum came onto the scene. It wasn’t just a currency, it was a chain that could run applications. This completely rewrote the destiny of altcoins. From the ICO craze of 2017, to the DeFi explosion in 2020, to the NFT mania in 2021 — it was like building a brand-new stage set: no longer “I copy a Bitcoin,” but “I can create freely on Ethereum.”
You could say Ethereum has been the “source factory” of almost every major crypto wave. And with the arrival of smart contracts, altcoins gained real vitality.
From that moment on, altcoins were no longer just “supporting actors.” Instead, borrowing Ethereum’s stage, they began a performance of a hundred flowers blooming.
The Most Direct Example
Take today’s market: among the top 100 altcoins by ranking, how many run on the Ethereum ecosystem? You’ll find at least one-third are strongly tied to Ethereum.
Whether it’s established on-chain projects like Uniswap and Aave, or new meme coins like PEPE-type tokens, they all rely on Ethereum’s soil and liquidity.
That’s why, in the language of the crypto market, the relationship between altcoins and Ethereum is like “fish and water.” Without Ethereum’s smart contract platform, the vast majority of altcoins simply couldn’t survive — let alone grow.
Ethereum: The “Home Port” of Altcoins
Why do we say Ethereum is the home port of altcoins? Three reasons:
The most convenient issuance platform
The ERC-20 standard is basically the “printing press” of the crypto world. With just a few dozen lines of code, you can issue a token on Ethereum. Because of this, during the 2017 ICO wave, almost all project tokens were launched on Ethereum.The center of liquidity
Most altcoins’ initial liquidity starts on Ethereum’s DEXes (decentralized exchanges). Uniswap and SushiSwap act like the “starting line,” providing the first market for these newborn tokens.Security and trust endorsement
Individual altcoins may be fragile, but Ethereum itself is an incredibly strong network. Attaching new tokens to Ethereum is like having a “powerful backer.” This greatly reduces the psychological barrier for users.
That’s why many people joke: Ethereum is the real kingdom of altcoins. Bitcoin may be the “value anchor,” but the birth, survival, and death of altcoins all play out in Ethereum’s world.
ETH’s Price Movements Decide Altcoins’ Fate
For investors, the most important question isn’t about ideals, it’s about prices. So how close is the relationship between altcoin prices and ETH? The answer is: highly correlated, but with different rhythms.
At the market level, there’s a simple and obvious rule: Ethereum’s performance is almost the barometer of altcoin trends.
When Bitcoin rises alone → most of the capital stays in BTC, altcoins perform poorly.
When ETH starts rising → the market gradually shifts from “only watching Bitcoin” to “focusing on ecosystems.” That’s when altcoins truly get their rotation opportunities.
So you’ll notice: every bull market follows the sequence — BTC pumps first, ETH follows, then altcoins rise together. For example, in the 2021 bull run, ETH broke its all-time high first, and then DeFi, NFTs, and meme coins came wave after wave, sending the market into full-blown frenzy.
A more recent example: ETH has been steadily rising lately, and as ETH rose, Bitcoin’s market dominance fell from about 65% in May to 59% in August, with capital rotating into altcoins. This fully supports the above view.
More subtly, institutional investors generally don’t buy small coins directly, but they do increase positions in ETH. If ETH’s performance clearly outpaces BTC, it signals liquidity overflow — meaning altcoin opportunities are about to arrive.
In the past few bull cycles, this pattern has almost never failed. ETH acts like a “signal light”: when it shines, altcoins are active; when it dims, altcoins collectively go silent.
The Triple Relationship Between Altcoins and Ethereum
If we dig deeper into the connection between altcoins and Ethereum, we can see at least three layers of relationship:
Technical relationship
The vast majority of altcoins don’t have independent blockchains — they rely on Ethereum’s smart contract ecosystem, especially standards like ERC-20, ERC-721 (NFTs), and ERC-4337 (account abstraction). This “holding onto a big thigh” approach saves them R&D costs while letting them directly benefit from Ethereum’s security and resources.Financial relationship
Ethereum hosts the largest decentralized trading and lending markets. Whether it’s Uniswap or Aave, most of the trading, collateral, and lending of altcoins must use ETH as the liquidity entry point. In other words, ETH is the “faucet” for altcoins — their initial funding, liquidity pools, and trading depth mostly come from ETH and stablecoins (USDT/USDC).Consensus relationship
Investor sentiment toward ETH often spills over into altcoins. There’s a saying in crypto: “Only projects recognized by ETH have a chance to enter the mainstream.” Whether it’s DeFi blue chips or NFT leaders, almost all originated on Ethereum. The growth of altcoins is essentially a process of gaining recognition from the Ethereum community and its capital.
You might ask: since we also have Solana, BNB Chain, Avalanche, and other new blockchains, why do altcoins still tie themselves so closely to Ethereum?
The answer is simple: Ethereum’s network effect is too strong.
The most users
The most active capital
The most complete tools
The largest developer ecosystem
Sure, other blockchains can foster their own altcoin ecosystems, but in the mainstream market, “ETH = the mother body of altcoins” has practically become consensus. Just like iOS and Android systems — there may be many phone brands, but the ecosystems are truly dominated by the operating systems themselves.
Risk: When Ethereum Gets Hurt, Altcoins Collapse Even Faster
Of course, this binding relationship isn’t without costs. Although altcoins ride Ethereum’s express train, once Ethereum encounters systemic problems, altcoins usually suffer even harsher shocks.
For example:
When Ethereum gas fees are too high → altcoin trading activity drops immediately.
When ETH crashes → funds withdraw from small coins first, causing altcoins to lose half their value.
When Ethereum upgrades run into issues (like merge delays or scaling failures) → altcoins instantly lose market confidence.
That’s why we often say: the risks of altcoins are the “amplified version of Ethereum.” If ETH drops 10%, small coins could easily fall 30–50%.
Conclusion: To Understand Altcoins, You Must First Understand Ethereum
For investors, to grasp the trends of altcoins, you can’t just stare at the ups and downs of individual projects. You first need to watch ETH’s performance and its ecosystem. ETH is like a giant reservoir — only when the water level rises will the overflowing water irrigate the fields of small coins.
So next time, when you’re asking “When will altcoins take off?”, why not first glance at ETH’s K-line chart? The answer is often hidden in that winding curve.
