Altcoins slump as bitcoin gains over two years

Over the past two years, gains in the cryptocurrency market appear to have been concentrated in bitcoin. While bitcoin rose 28%, the median return for mid-cap altcoins fell 74%, and ethereum was effectively flat.

On Sept. 20, blockchain outlet Decrypt reported that the figures were compiled in a report jointly written by crypto data analytics firm Glassnode and virtual asset exchange Bybit. The report said the gap between bitcoin and the rest of the market was a standout feature of this market cycle. It said mid-cap altcoins showed a pattern of being "halved and then halved again" while bitcoin accumulated gains.

The trend contrasts with a typical "alt season". Generally, as a bull market matures, funds move from bitcoin into small and mid-sized tokens, but that rotation did not clearly appear in this cycle. Ethereum, the second-largest cryptocurrency by market value, was also largely flat over the same period, showing that the uptrend was concentrated in bitcoin even among top assets.

Leverage was also concentrated in higher-risk assets. The report said bitcoin futures open interest was about 2% of its market value, while PEPE, a more speculative small altcoin, was about 24%. That means market leverage was built up more heavily in relatively risky assets, while bitcoin led the price rise.