The cryptocurrency market is harsh and cold; the altcoin index has dropped more than 30% since September, but the dawn of hope may be closer than we think.
As an analyst who has been navigating the cryptocurrency market for many years, I recently had an astonishingly similar feeling to that of a seasoned investor: opening the trading software, my eyes are filled with the fleeting trends of altcoins, with a few coins occasionally following the rebound of BTC and ETH. However, if you don't take profits in time, you will soon find yourself trapped.
This market condition tells us that the overall state of altcoins is still in a fluctuating downward pattern. But as history has repeatedly shown, the most desperate times in the market often coincide with the moments when a turnaround is brewing.
01 Market Status: The Darkest Moment for Altcoins
The current altcoin market is indeed bleak. Data shows that the ratio of the total market cap of altcoins to that of Bitcoin has fallen to a multi-year low, and the small-cap token index has dropped to its lowest level since November 2020.
This market performance stands in stark contrast to the boom of 2021. At that time, simply labeling a project as DeFi or NFT could easily yield several times the returns. Now, even though Bitcoin has risen about 7 times from its low, breaking $126,000, most altcoins remain weak, with their price ratio against Bitcoin dropping to a four-year low.
Liquidity is concentrating on high-value assets. Institutional funds have flooded into the market through Bitcoin and Ethereum ETFs, but this capital has not flowed into ordinary altcoins. In contrast, the MarketVector Digital Assets 100 Small Cap Index has seen a return rate of about -8% over the past five years, while the corresponding large-cap index has surged by as much as around 380%.
02 Why are Altcoins Struggling to Achieve Past Glory?
The market landscape has fundamentally changed. First, the token supply has exploded, with tens of thousands of new tokens emerging daily by 2025, with Memecoins alone accounting for over 70% of newly issued tokens. The oversupply makes it difficult for capital to drive the overall sector up.
Secondly, there are structural issues with the token economic models. Many new projects adopt a 'low circulation - high FDV' model for issuance, creating a sense of scarcity with low initial circulation. However, as the unlocking period arrives, early investors and teams sell off in large quantities, leading to a rapid price crash of 70% to 90%.
The most critical factor is that institutional investors have dominated this market cycle through ETFs, and they are only interested in a few mainstream assets like Bitcoin and Ethereum. This has caused altcoins to lose the capital momentum they enjoyed in previous cycles.
03 Bottom Signal: How to Identify Market Turning Points?
Although the market seems bleak, several technical indicators are hinting at a potential turning point. The Relative Strength Index (RSI) is about to form a golden cross pattern, a signal that appeared before the major bull market for altcoins in 2021.
More importantly, the Moving Average Convergence Divergence (MACD) has been operating in negative territory for a record 43 months, and it is currently showing signs of an upward reversal.
From a market sentiment perspective, it is extremely rare for the comprehensive altcoin index RSI to enter negative territory, indicating that the market is in an extremely oversold state. Such extreme sentiment typically occurs at market bottom areas.
The flow of funds also provides some clues. Although most altcoins have performed poorly, some projects with real fundamentals and actual earnings, such as Hyperliquid (HYPE), have risen against the trend, growing over 250% in the year since their launch. This indicates that smart money has begun to make selective investments.
04 My Strategy: How to Operate in the Current Market Environment?
In the face of such a market environment, my strategy is 'cautiously optimistic.' I allocate most of my capital to Bitcoin and Ethereum, reserving only a small portion for altcoin investments.
In terms of selection, I focus on two types of altcoins: one is projects with actual revenue models and clear token economic models, such as Hyperliquid, which conducts token repurchases through trading fee income; the other is quality projects in popular sectors that have been wrongly punished, such as AI agents, RWA tokenization, and leaders in the information finance field.
Technical analysis is equally important. I will focus on those coins that have broken through the resistance level of a four-year downtrend, as well as projects where the RSI has exited the oversold zone, combined with increased trading volume.
The most critical factor is that I strictly control positions and stop-loss points to protect capital safety in a highly volatile market. I never blindly chase after trends without confirmation signals and do not easily change investment strategies due to short-term price fluctuations.
The next 1-2 months may still be a volatile bottoming period for altcoins, but the first and second quarters of 2026 could become a window for investors to finally reap the rewards they have been waiting for. The market is never short of opportunities, just lacking the eyes and patience to discover them.
While most people are still panicking over the current slump, smart investors are already preparing for the next cycle. Just like that cold winter at the end of 2020, who would have thought that the next phase would be a global crypto feast?
Dear readers, what potential altcoins have you been paying attention to recently? Feel free to share your findings in the comments section. After all, in the world of cryptocurrency, going solo may be fast, but teamwork can go far.
Follow me@加密崎哥 #比特币与黄金战争 $BTC #加密市场观察
