Investing.com -- Altcoins are set to continue underperforming while Bitcoin attracts the bulk of market attention and liquidity amid the structural headwinds and a broad investor pullback.
The crypto market is currently locked in a ’single-core’ mode, said analyst Pat Zhang.
"Bitcoin continues to rise, while altcoins remain stuck in a liquidity desert."
According to Zhang, a key driver of the divergence is the lack of compelling narratives or user growth in the altcoin space.
Occasional hot trends fail to gain momentum. Memecoins have outpaced more heavily funded projects, reflecting investor fatigue toward tokens with unclear utility or upside.
There is also a significant shift in venture capital.
In the first quarter, 57% of global VC funding went to AI and machine learning startups, while crypto startups attracted just $4.8 billion, nearly half of it from a single investor.
Major crypto funds have slowed new deployments and paused token launches, signalling the end of the early-stage altcoin cycle.
Bitcoin’s market share has surged to 64.4%, its highest level in four years, while the market cap of altcoins excluding Bitcoin and Ethereum is down 22% year-to-date, marking their worst performance since 2020.
Zhang noted that the current environment resembles the early phase of the 2019–2020 bull market, when capital remained concentrated in Bitcoin.
Until we see clear signs of capital rotation, such as BTC peaking and Bitcoin entering a multi-week consolidation, altcoins will likely continue to underperform, he said.