Altcoin Market in Distress: Will ETFs Be the Catalyst for Recovery?
The altcoin market is currently facing a downturn, with over half of the crypto assets struggling to stay afloat. With more than 300 assets tanking 30-60% and losses dwarfing gains, the distress is palpable.
According to Arkham Intelligence data, the number of altcoins that have plummeted by over 60% in the past year exceeds those that have managed to gain value. Amidst this uncertainty, all eyes are on altcoin ETFs. Investors and analysts alike are monitoring the altcoin ETF developments to see if they could bring a fresh wave of enthusiasm to the market.
As Bitcoin hovers below the significant $110k range, the altcoin market is also witnessing increased pressure. Top assets like Ethereum, XRP, BNB, and Solana have experienced significant declines of 11%, 8%, 12%, and 12.2%, respectively, over the past week.
Arkham data revealed a stark imbalance in the altcoin market, which is now dominated by losses. More coins have plummeted over 60% in value compared to those posting gains over the past year. The scope of the decline is broad, with over 300 crypto assets – including dogwifhat (WIF) and Shiba Inu (SHIB) – losing 30-60% of their value. This suggests that a significant portion of the altcoin market, potentially over half, is in trouble.
The underperformance of these assets comes as no surprise, given the sharp decline in the altcoin season index (ASI) in H1 2025, which followed a brief rally sparked by the US election in late 2024. The ASI plummeted from nearly 90% to around 10%, erasing the gains made in 2024, largely due to the impact of tariff wars.
A brief resurgence in Q2 2025 saw altcoins gaining momentum through July-September, buoyed by a favorable macro environment. However, the optimism was short-lived, as the October crash and renewed US-China tariff tensions soured sentiment. Although the tariff issue has since been resolved, the crash’s impact lingers, dampening risk appetite and shifting the ASI from ‘altcoin season’ territory to neutral.
Notably, market experts and analysts have been optimistic about the impact of ETF approvals and launches on the altcoin market. Many believed that the ETF mania could be the trigger for altcoins like SOL and XRP.
Onchain research head Leon Waidmann asserted that each altcoin ETF approval could “open the door for the next wave of institutional buying.” He added,
“Altcoin ETF inflows are the inevitable next step after Bitcoin and Ethereum ETFs proved institutional demand. This is regulatory confidence translating into capital flows.”
Despite record-breaking inflows for the Bitwise SOL ETF, the token’s price has consolidated between $180 and $200. XRP is also facing resistance at $2.7 ahead of potential ETF approvals, but options data hints at near-term optimism. Meanwhile, Chainlink (LINK) and Artificial Superintelligence Alliance (FET) are attracting major accumulation interest, with large outflows from Binance.
Although a bearish outlook presently exists, experts like Michael van de Poppe believe in a potential bull run as a desired outcome. Van de Poppe says that the correction evident since the Federal Reserve’s meeting has likely impacted investor confidence, though there seems to be preliminary data building for a turnaround.
Historically, the crypto market has followed the Federal Reserve’s monetary policy. Bitcoin surged, as did altcoins, when the Fed cut rates in 2020 and engaged in quantitative easing. Conversely, since the Fed began its tightening process and rate raises in late 2021, there has been a confirmed bear market.
The more recent indications from the Fed appear to be a shift in their priorities toward employment and economic growth rather than solely inflation. Additional weak labor and business data may push the Fed into a plan for further rate cuts down the road, which could put further liquidity into the market and create strong interest in risk assets such as cryptocurrencies.
The market for alternative cryptocurrencies is in a slump, with many alternative cryptocurrency assets unable to maintain any gains. There are still signs of hope in terms of potential approval for ETFs and a change in monetary policy from the Fed. While analysts believe we could be near a bull run or a rebound, they have pointed to institutional buying as being at “record highs,” in addition to the positive market analysis.
