Some experts claim that altcoins will "die" and "fade away"—but that doesn't tell the whole story. A recent Bloomberg report has sparked concern among investors, highlighting a significant divergence between Bitcoin’s performance and that of smaller cryptocurrencies.
While Bitcoin is poised to set a new monthly closing record, many alternative coins lack the same bullish momentum. One chart, in particular, underscores the challenges currently facing the altcoin market.
Understanding The Current Altcoin Landscape
Two MarketVector indices help illustrate this growing divide. The purple line represents Bitcoin, while the blue line tracks a basket of smaller coins. Both saw substantial gains last November following Donald Trump’s reelection. However, their paths have sharply diverged since. Over the past year, Bitcoin surged by 73%, while the small-cap index fell by approximately 40%.
This chart, however, is just one part of a broader narrative. The purple line represents the MarketVector Digital Assets 100 Small-Cap Index, which tracks 50 altcoins. Well-known tokens like Maker, Worldcoin, BONK, and Fartcoin are included. Crucially, this index does not include major assets like Ether, XRP, or Solana—each of which may soon become more accessible to institutional investors through exchange-traded funds (ETFs).
So, how have top altcoins performed compared to Bitcoin?
How Major Altcoins Have Fared Against Bitcoin
The MarketVector Digital Assets 10 Index provides some insight. Once again, Bitcoin is shown in purple, up 73% over the past 12 months. The blue line, which represents the altcoin index, gained just 27%. Bitcoin holds a 31% weight in this index, followed by Ether (30%), XRP (13%), Binance Coin (9.5%), and Solana (8%).
Several key observations emerge from this data:
- The inclusion of altcoins diluted the index's returns, meaning a Bitcoin-only portfolio would have performed more strongly.
- Ether, which has fallen 26.5% since June 2024, significantly dragged down the index's performance.
- XRP, which soared by an impressive 363% compared to 12 months ago, was a major contributor to the index's gains despite its smaller weighting.
- Solana has struggled due to fading demand for meme coins.
Nick Philpott, co-founder of Zodia Markets, commented on the state of altcoins in the Bloomberg report:
"Frankly, I think they will die. They will wither. Strictly speaking, many of these things will just sit there gathering dust forever."
There is some truth to this perspective. Bitcoin’s dominance—its share of the total cryptocurrency market—has steadily climbed over the past 12 months, rising from 53% to 64%. Most of these gains came at the expense of Ether, whose market share plummeted from 18% to 9% during the same period.
Yet, the grey line representing altcoins has remained relatively stable, currently accounting for about 26% of the market.
The Rise of "Dead" Cryptocurrencies
Data from CoinGecko shows a significant increase in the number of failed cryptocurrencies. Since 2021, over 50% of the altcoins listed on its platform—amounting to 3.7 million tokens—have failed. One report highlighted:
"Astonishingly, 1.8 million tokens collapsed in Q1 of 2025 alone, accounting for 49.7% of all documented project failures."
These staggering numbers are largely attributed to platforms like pump.fun, which allow anyone to create their own cryptocurrency. While such platforms have spurred countless meme coin launches, very few achieve lasting success.
Will There Be An Altcoin Season?
Analysts are divided on whether the current bull cycle will include an "altcoin season," much to the delight of Bitcoin maximalists. Figures like Adam Back of Blockstream have urged investors to dump small-cap cryptocurrencies in favor of Bitcoin. Financial firms like Strategy and Metaplanet have echoed similar sentiments.
Conversely, others like Xu Han of HashKey Capital believe only a handful of projects will see healthy gains in the coming months. This suggests that the era of "altcoin rallies broadly driven by speculation and FOMO" may be over.
For some altcoins, gaining ETF approval may be the only way to remain competitive in a rapidly evolving market. We may also see projects merging to form stronger alliances, potentially ushering in an era of consolidation within the altcoin market.
As CoinMarketCap notes, we are currently in a "Bitcoin season." This trend appears unlikely to change in the near term.
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Frequently Asked Questions
What is an altcoin?
An altcoin is any cryptocurrency other than Bitcoin. The term encompasses a wide range of projects, from established tokens like Ethereum to newer meme-inspired coins.
Why are altcoins underperforming Bitcoin?
Several factors contribute to this, including Bitcoin’s strong institutional adoption, the approval of Bitcoin ETFs, and a shift in investor preference toward more established, less risky digital assets.
Can altcoins recover?
While many altcoins may struggle, those with strong use cases, active development, and clear utility could still see growth. Market cycles have historically included periods where altcoins outperform Bitcoin.
What does Bitcoin dominance mean?
Bitcoin dominance refers to Bitcoin’s share of the total cryptocurrency market capitalization. A higher percentage indicates that Bitcoin is outperforming other cryptocurrencies.
Should I invest in altcoins?
Altcoin investments carry higher risk due to volatility and lower liquidity. It’s essential to conduct thorough research and consider your risk tolerance before investing.
Are all small-cap altcoins risky?
While not all are equally risky, small-cap altcoins generally experience higher volatility and are more susceptible to market sentiment and liquidity issues than larger-cap assets.