True, the utility of a coin should absolutely effect its value. There should be a fundamental valuation assigned to a project. I think some projects like ethereum and monero should have broken this correlation by now. But given that most money in cryptos is speculative or well, money that is short term and drives daily volatility is speculative, so alts are just seen as a way to get beta exposure.
I think one reason ethereum may not have broken this correlation is that one is yet to see how useful ethereum can be in the long run. True, a lot of projects have been launched on it but most have little to no use case truly speaking. Ethereum will find its own valuation once the dust settles.