Any future altcoin rally is expected to be highly selective, favoring tokens with real-world utility.
Bitcoin and Ethereum continue to capture investor interest, while the broader altcoin market struggles to keep pace, creating a divergence that experts believe is a result of the markets maturing.
While major assets like Ethereum, XRP, and Solana have notched double-digit year-to-date gains, the performance across the rest of the top 10 cryptocurrencies by market capitalization has been lackluster.
With the exception of BNB, which has reached multiple record highs this year, other tokens like Chainlink, Cardano, Sui, and Dogecoin have seen performance ranging from single-digit gains to double-digit losses for the year, according to CoinGecko data.
The percentage of coins trading above their 200-day moving average, often a barometer for an asset’s bullish or bearish slant, has fallen to approximately 55%, a notable decline from this year’s peak of 78% recorded on September 13, according to data from MacroMicro.
“Capital naturally prefers assets with high liquidity, clear narratives, and strong certainty,” Jeffrey Ding, chief analyst at HashKey Group, told Decrypt.
He explained that a structurally divided market is inevitable under current macroeconomic conditions, with capital favoring top assets like Bitcoin and Ethereum, driven primarily by institutional flows via ETFs and corporate treasuries.
Ding explained that many altcoins are being left behind because they have failed to connect with new market narratives, citing examples of AI, RWA, and decentralized exchange narratives that have failed to gain traction.
“The market is losing patience with high-valuation, low-circulating-supply tokens lacking clear use cases,” he added.
“It’s a sign that the industry is maturing,” Peter Chung, Head of Research at Presto Research, told Decrypt. “Market participants have learned over the years how to evaluate projects based on their merits and differentiate winners from losers.”
He attributes this shift to the changing composition of market participants.
“With increasing institutional participation, the days of retail investors aping in and out of particular sectors just based on ‘vibes’ are mostly behind us,” Chung explained.
“The retail investors are, of course, still there doing their things, but their overall impact on the market is much less, and is overwhelmed by the institutional flow, which is much larger and disciplined.”
Chung noted that while retail-driven rallies still occur in specific niches — citing ZCash as a recent example — these are now “pockets of strength” rather than market-wide trends.
Zcash, a privacy coin, has rallied 140% in the past two weeks to $134, per CoinGecko data, yet it remains 95.9% below its all-time high of $3,191. The token’s rise comes after it received endorsements from multiple prominent investors in both crypto and traditional finance, Decrypt previously reported.
Looking ahead, Ding expects a change, but not a return to a broad-based altcoin boom.
“The current stagnation does not mean altcoins will be absent this cycle — rather, they may awaken when Bitcoin and Ethereum enter a consolidation phase,” he said.
However, Ding emphasized that any rally will be “highly selective,” favoring tokens “anchored to real-world utility and value creation, not mere storytelling.”
