Altcoin indices have significantly underperformed Bitcoin, Ethereum, and traditional equities in 2024 and 2025. Liquidity is concentrating in larger, more established cryptocurrencies, particularly those with regulatory clarity.
What to Know:
- Altcoin indices have significantly underperformed Bitcoin, Ethereum, and traditional equities in 2024 and 2025.
- Liquidity is concentrating in larger, more established cryptocurrencies, particularly those with regulatory clarity.
- Diversifying into smaller altcoins has not provided a risk-adjusted benefit for Bitcoin investors during this period.
The performance of crypto assets compared to stocks since January 2024 indicates a shift where “altcoin trading” mirrors stock trading dynamics. While the S&P 500 and Nasdaq-100 achieved substantial gains, many altcoin indices experienced significant losses. This divergence raises questions about the benefits of diversifying into smaller crypto assets versus sticking with more established options like Bitcoin and Ethereum.
Smaller crypto assets, as tracked by indices like the CoinDesk 80 and the MarketVector Digital Assets 100 Small-Cap Index, have struggled to deliver positive returns. The CoinDesk 80, for example, experienced a sharp decline in early 2025, highlighting the risks associated with broader altcoin investments. These indices paint a consistent picture of underperformance compared to both Bitcoin and traditional equities.
In contrast, major US stock indices posted impressive gains with relatively controlled drawdowns. The S&P 500 and Nasdaq-100 demonstrated strong uptrends, compounding returns year over year. This performance highlights the stability and potential returns available in traditional markets, especially when compared to the volatility and losses seen in many altcoin investments.
Risk-adjusted returns further emphasize the underperformance of altcoins. Broad alt indices posted negative Sharpe ratios, while the S&P 500 and Nasdaq delivered strongly positive Sharpe ratios. This suggests that, at least for the examined period, investors were not adequately compensated for the higher risk associated with holding altcoins compared to US equities.
The concentration of liquidity in larger cryptocurrencies is another key trend. Institutional flows have increasingly favored Bitcoin and Ethereum, particularly through exchange-traded products (ETFs). This shift indicates a preference for assets with greater regulatory clarity, liquid derivatives markets, and established custody infrastructure, leaving smaller altcoins struggling for attention and investment.
The data from 2024 and 2025 suggests a clear shift in the crypto market. Investors seeking diversification and risk-adjusted returns may find more value in focusing on established cryptocurrencies like Bitcoin and Ethereum, or even traditional equities, rather than venturing into the often volatile world of smaller altcoins. This trend underscores the importance of careful analysis and strategic allocation in the evolving digital asset landscape.
Related: Bitcoin Dips Below $90K; Macro Events Loom
Source: Original article
Quick Summary
Altcoin indices have significantly underperformed Bitcoin, Ethereum, and traditional equities in 2024 and 2025. Liquidity is concentrating in larger, more established cryptocurrencies, particularly those with regulatory clarity. Diversifying into smaller altcoins has not provided a risk-adjusted benefit for Bitcoin investors during this period.
Source
Information sourced from official Ripple publications, institutional research, regulatory documentation and reputable crypto news outlets.
Author
Ripple Van Winkle is a cryptocurrency analyst and founder of XRP Right Now. He has been active in the crypto space for over 8 years and has generated more than 25 million views across YouTube covering XRP daily.
Editorial Note
Opinions are the author's alone and for informational purposes only. This publication does not provide investment advice.
