A decade ago, the crypto market was straightforward: when Bitcoin Soared, some 500 or so alternative cryptocurrencies followed suit. When it sank, the entire market crashed. Portfolios spread across “diversified tokens” with unique use cases look diverse on paper, but cratered during Bitcoin slides.
Fast forward to 2026, and little has changed, although the number of altcoins has grown to several thousand.
Despite institutions painting crypto as a multi-asset class to hoard, with each project boasting a distinct investment appeal, the reality is grim. The market is still a one-trick pony, following BTC up and down, offering no real diversification.
The value of the annual date indicates this fact. Bitcoin is down 14%, its lowest since April of last year, with nearly all major and minor tokens bleeding a similar amount, if not more.
CoinDesk has 16 indicators that track the performance of various coins that have unique use cases and appeal, and Almost all are down 15% to 19% this year. Indices linked to DeFi, smart contract and computing coins are down 20%-25%.
Here’s where it gets more worrisome: Along with BTC, tokens linked to blockchain protocols that generate real income have fallen.
According to Defilama, HyperLiquid, Pump, Io, Jupiter, Aerodrome, Legether, Base, and Layer 1 blockchains like Tron have decentralized exchange and lending and borrowing and lending protocols like HyperLiquid, Pump, Ive, Jupiter, Aerodrome, Legether, Base, and Layer 1 blockchains. This is in stark contrast to Bitcoin, which has failed to overcome its dual use case as digital gold and payments infrastructure.
The native tokens of most of these protocols are in red. For example, the popular Ethereum-based lending and borrowing protocol Ayu token has fallen by 26%. HyperLiquid’s hype stands alone, even. 34.80 is still up 20% after pulling back to 30.00, with tokenized gold and silver trading accelerating.
According to some observers, the pessimistic trend is the result of a popular narrative that labels large-cap tokens like Bitcoin, Ether and Solana as safe havens (safe pockets during downturns) while labeling revenue-generating projects as unstable.
“The clowns who run the industry will keep telling you that BTC, ETH and Sol are the ‘safe haven majors’. Meanwhile the only things that make any money in a downturn are $hype, $pump, $ave, $arrow and some other defy protocols,” Jeff Dorman, Chief Investment Officer at ARCA, said. said on x.
He added that the crypto industry needs to take a page from traditional markets by building consensus through truly flexible sectors, such as DeFi platforms, and hammering their haven appeal home through exchanges, analysts and funds.
Just as Wall Street brokers and research firms pitched “consumer staples” or “investment-grade bonds” as bullish, turning data into price increases during bear markets, crypto must be anointed and promoted to its safe havens to make them real.
Dorman explained, “Why do you think some corporate bonds and stocks do better than others? Because the industry decided that certain sectors were ‘defensive’ — consumer staples, utilities, health care, etc.”
Cash advocates are spoiled
According to Marcus Thelen, the founder of 10x Researchpart of the problem is stablecoins, digital tokens whose values are pegged to an external reference, such as the US dollar. It is often seen as a cash equivalent. And so, when the biggest cryptocurrency slides, traders risk their portfolios by moving into stablecoins.
“Unlike equity markets — where capital is typically required,” Thielen told Kondisk.
He added that Bitcoin has always been the most dominant cryptocurrency, accounting for more than 50 percent of the total value of the total digital asset market. This makes it difficult to diversify.
“[Still] Among the major tokens, BNB and TRX have historically behaved more defensively, with TRX showing the strongest defensive characteristics,” he noted. TRX is down just 1 percent this year, outpacing BTC’s steeper drop.
Looking ahead
Institutional participation in the Bitcoin market has been on the rise since the launch of spot ETFs in the US two years ago. This is evident from BTC’s share of the total crypto market, which has since exceeded 50%.
This trend is unlikely to change, which means that Bitcoin’s prospects for decoupling the broader crypto market look bleak.
“This will continue to be the focus in BTC, as the ongoing downturn helps eliminate zombie projects and unprofitable businesses,” said Jimmy Yang, co-founder of the institutional liquidity provider. Orbital markets.