Altcoin volumes are ‘more concentrated’ than ever

This is a segment from the Empire newsletter. To read full editions, subscribe.

Even before the tariffs, it was clear that risk assets — like bitcoin and crypto — were going out of style for a lot of investors.

And now, with the tariffs on the table, it wouldn’t be surprising if we continued to see folks move away from these riskier assets. Which leaves us with one big question: Does this mean we’re out of luck for an altcoin season?

A Kaiko Research and BRN report noted that altcoins just haven’t been able to break — or, in some cases, even come close to — their 2021-2022 peaks.

On the bright side, though, we are seeing altcoin dominance levels rise relative to bitcoin, but the distribution there has been uneven.

Source: Kaiko Research and BRN Report

“Altcoin trade volume has returned to pre-FTX levels, but it is more concentrated than ever. The top 10 altcoins account for 64% of the total volume, indicating that investors are focusing capital on a select group. Market depth mirrors this trend, with the top 10 comprising over 60% of the 1% depth,” the analysts wrote.

In a nutshell — after the US elections, there was a jump back into altcoins, but only into a select few. Altcoins across the board didn’t get the boost, which is different from what we’ve seen the last few cycles, when the rising tide lifted all the boats.

“This shrinking pool of market leaders reflects a shift from retail-driven speculation to institutional capital favoring a concentrated set of high-liquidity assets,” according to the report.

The smaller pool, the analysts noted, can be tied back to the institutional shift. But interest rates play into the narrative as well. Tighter monetary policy is forcing traders to take on a more cautious approach.

Source: Kaiko Indices

There was a lot of hope initially that regulatory certainty would be a much-needed boost for altcoins — especially since the previous SEC clearly targeted some of the top ones in their regulation via enforcement approach. But without the reengagement of retail, altcoins are left in the lurch.

Perhaps altcoin ETFs could change that and offer a bit more certainty for the institutional crowd, which is clearly ready to engage with parts of crypto. But, honestly, I’m not so sure. Mostly because — outside of a potential SOL ETF — it’s not clear what other altcoins would be ready for an ETF at this stage.

But don’t let my cautiousness dim your hope for altcoin szn. There are still a couple of factors to keep an eye on, per the report. We know RWAs and stablecoins are real winners, which could also translate into altcoins. Projects that are tied to a “real-world utility” like DePIN, for example, could also grab interest.

Source