(Bloomberg) — The crypto market selloff shows no signs of abating, and some of the riskiest tokens are bearing the brunt of it.
The MarketVector Digital Assets 100 Small-Cap Index, which tracks the 50 smallest digital assets in a basket of 100, fell to its lowest level since November 2020 on Sunday before paring some losses.
Most Read from Bloomberg
The low point came as Bitcoin, the largest cryptocurrency, erased its roughly 30% advance for 2025 through early October, when it hit a record. So-called altcoins, a barometer of risk appetite in the most speculative corners of crypto, have trailed their larger counterparts by a wide margin since early 2024.
During past bull markets, the small-cap index often outpaced its large-cap counterpart, benefiting from traders’ hunger for high-risk, high-reward bets. But that trend reversed last year after the US approved Bitcoin and Ether exchange-traded products, which became a focal point for institutional flows.
Retail traders are learning lessons from previous cycles, said Pratik Kala, portfolio manager at Australia-based hedge fund Apollo Crypto. “A rising tide doesn’t lift all boats — it only lifts the quality ones,” he said.
The altcoin malaise risks derailing issuers’ plans to list a host of exchange-traded funds tied to such tokens. As of mid-October, roughly 130 ETF applications linked to smaller cryptocurrencies were pending with the US Securities and Exchange Commission, according to data compiled by Bloomberg Intelligence.
One product linked to Dogecoin, created as a joke in 2013, began trading in September under the ticker DOJE. That ETF hasn’t seen a single day of inflows since Oct. 15, data compiled by Bloomberg show. Dogecoin has fallen 13% in the past month.
Over the past five years, the small-cap index is down nearly 8%, while its large-cap counterpart has surged about 380%, highlighting how far the segment has fallen out of favor.
The broader crypto market is still reeling from an Oct. 10 meltdown which triggered about $19 billion in liquidations and wiped out more than $1 trillion in market value across all tokens. Since then, risk appetite has collapsed, and traders continue to steer clear of the most speculative virtual currencies.
(Updates with pending ETFs in sixth paragraph.)
Most Read from Bloomberg Businessweek
