Original author: kyle_chasse
Original translation: Deep Tide TechFlow
The past crypto market had a classic script: Bitcoin rises first, followed by a rotation into altcoins.
The bull markets of 2017 and 2021 validated this pattern. Bitcoin became the "stronghold" for capital, attracting a massive influx of funds, which then flowed into altcoins, driving the prosperity of the entire market.
However, this model seems to have failed in 2025.
ETF funds locked up, liquidity dried up
Institutional Effect: The funds from ETFs are not for speculation but for long-term holding. This has led to a significant decrease in market liquidity, and altcoins have lost their rotation opportunities.
Data Comparison: In 2021, the total market capitalization of altcoins accounted for 38.7% of the crypto market, while by 2025, this ratio had dropped to 14.2%.
The proliferation and dilution of altcoins
The number of altcoins in the market surged from thousands in 2021 to 12 million in 2025 (including long-tail tokens and MEME coins). The oversaturation of tokens has diluted the market, making it difficult for quality projects to stand out, while inferior projects flood the market.
In 2021, there were only 300 tokens on the Binance platform, whereas now CoinMarketCap tracks over 12 million tokens. Such massive growth has not brought innovation; instead, it is filled with "junk tokens."
Many retail investors have suffered heavy losses in MEME tokens within the Solana ecosystem and opaque Telegram trades, with funds lost and nearly impossible to recover.
MicroStrategy, the new "new altcoin" for institutions
In the 2025 crypto market, the behavior patterns of institutional investors have fundamentally changed. They no longer rely on altcoins for high returns but choose to leverage Bitcoin.
MicroStrategy (MSTR) has become the "new altcoin" for institutional investors. By issuing bonds to purchase Bitcoin and then using Bitcoin as collateral for financing, MicroStrategy provides institutions with a low-risk, high-leverage investment method.
MicroStrategy currently holds over 300,000 Bitcoins, with an average purchase cost of about $13,900, while the current price of Bitcoin is far above this level. In contrast, institutions can avoid the risks of investing in altcoins and indirectly hold Bitcoin through MicroStrategy's stock to enjoy leveraged returns.
The preference of institutions for MicroStrategy further compresses the survival space for altcoins.
The "clearing" of the altcoin market is accelerating. With the withdrawal of institutional funds and the depletion of retail funds, many projects have fallen into a state of "no one cares."
A large number of MEME tokens in the Solana ecosystem have become a "hot potato" game, with most retail investors ultimately becoming "bag holders."
In 2024, of the 870,000 MEME tokens issued on the Solana chain, only 3.7% survived for more than 30 days. After the funds drained away, these tokens have virtually no chance of recovery.
New survival rules under the PVP model
As the traditional "buy-hold-wait for rotation" investment logic fails, the crypto market enters a new phase of "player versus player" (PVP). In this phase, only those who discover trends early can profit, while most become "exit liquidity."
The past cyclical investment strategy—"buy altcoins, wait for bull market rotation"—has become obsolete.
Now, the market has become more brutal: if you are not among the first to enter a trend, you are likely to become "exit liquidity" for other players.
Binance founder CZ once stated that 99% of traders would have far higher returns if they chose to hold Bitcoin instead of speculating on altcoins.
Although most altcoins have lost value, a few quality projects may still rise in the future.
When Bitcoin's price experiences a significant increase, market funds may still flow into a small number of quality projects, but this resembles a "selective market" rather than a comprehensive "altcoin season."
The question is not "will there be opportunities," but "when will there be opportunities."
Despite the current market environment being extremely unfavorable for altcoins, it does not mean they have no future at all. A few truly valuable projects may survive the culling and secure a place in future markets.
Characteristics of quality projects: real-world application scenarios (such as DeFi protocols), strong community support, and long-term technological accumulation.
Bitcoin's dominance will further strengthen. With the proliferation of ETFs and the continuous influx of institutional funds, Bitcoin may become an asset similar to "digital gold," with its volatility gradually decreasing.
The crypto market in 2025 is undergoing profound changes.
The old rotation logic has failed, and new rules are being established. In this process, most projects will be eliminated, while a few quality projects will encounter new opportunities. For investors, understanding the new market rules and avoiding becoming "exit liquidity" is key to future success.
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