Bitcoin’s recent surge toward new all-time highs has been a stark contrast to the performance of the broader altcoin market. While the cryptocurrency market as a whole has experienced significant growth, the value of altcoins, or alternative cryptocurrencies, has declined significantly.
During the previous market cycle, when Bitcoin reached its peak, altcoins also experienced substantial gains. However, this time around, the situation is different. In the past, when Bitcoin set new all-time highs, the total cryptocurrency market capitalization hovered around $3 trillion. This was the case in November 2021 when Bitcoin reached $69,000 and again in March 2023 when it hit $73,738.
Currently, as Bitcoin approaches new price highs, the total market capitalization remains around $2.5 trillion. This indicates a decline of approximately $500 billion in the value of altcoin markets compared to previous peaks.
One of the primary factors contributing to this decline is the underperformance of Ethereum. During the last bull market, Ethereum’s market capitalization reached $570 billion when it peaked at $4,878 in November 2021. In March 2023, it reached $490 billion, surpassing $4,000. However, its current market capitalization is only $317 billion, and its price has struggled to break the $2,650 resistance level, representing a 46% decline from its peak three years ago.
Ethereum is not the only altcoin that has been struggling. Most high-cap crypto assets have experienced significant declines from their peak values. Solana (SOL) is down 31%, XRP is down 85%, Dogecoin (DOGE) is down 76%, Toncoin (TON) is down 39%, and Cardano (ADA) is down a staggering 88%. Other previously high-cap altcoins, such as Polkadot (DOT) and Shiba Inu (SHIB), have collapsed by 92% and 78%, respectively.
The only altcoin among the top ten in 2021 that is even close to its peak is Binance Coin (BNB), which is currently 16% away from a new price high.
This decline in the altcoin market capitalization is occurring despite a surge in stablecoin capitalization, which is currently at $177 billion, up from around $120 billion in late 2021. Analyst James Check has noted that the impact of the stablecoin market cap on altcoins is actually worse than it appears.
The lack of momentum in the altcoin market and the decline in their overall value suggest a lack of retail participation at the moment. This is further supported by the surge in institutional Bitcoin ETF inflows, which have exceeded $2 billion in the past five trading days. Additionally, Bitcoin dominance has surpassed 60% for the first time since March 2021, according to TradingView.
Despite these trends, some analysts remain optimistic about the future of altcoins, believing that an altcoin season may be on the horizon.