Altcoins are expected to continue underperforming as Bitcoin draws the majority of market attention and liquidity, amid broader investor caution and ongoing structural challenges.
Pat Zhang, an analyst, described the current state of the crypto market as being in a “single-core” mode, where Bitcoin continues to surge while altcoins are stuck in what he referred to as a “liquidity desert.”
According to Zhang, the key factor driving this divergence is the absence of compelling narratives and significant user growth in the altcoin sector. While occasional trends, such as memecoins, have sparked short-term interest, they have struggled to gain sustained momentum. In contrast, these tokens, often with unclear utility or potential, have outpaced more heavily funded projects, signaling investor fatigue.
Zhang also pointed to a notable shift in venture capital (VC) funding, with AI and machine learning startups capturing 57% of global VC investments in the first quarter of the year. Meanwhile, crypto startups secured just $4.8 billion—nearly half of which came from a single investor. This slowdown in venture capital investment highlights a shift away from the early-stage altcoin cycle.
Bitcoin’s dominance has surged to 64.4%, its highest level in four years, while the combined market cap of altcoins, excluding Bitcoin and Ethereum, has dropped by 22% year-to-date, marking the worst performance since 2020.
Zhang compared the current market environment to the early stages of the 2019–2020 bull run, when capital was predominantly concentrated in Bitcoin. He suggested that, until there are signs of capital rotation—such as Bitcoin reaching a peak and entering a multi-week consolidation—altcoins are likely to continue struggling.
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