- Altcoins have underperformed.
- There's still hope for another alt season, according to Wintermute.
The ailing altcoin market could still break out of its funk and rally again, according to analysts at Wintermute.
In a January 13 report, the crypto market maker laid out three conditions that could kickstart a boom in smaller crypto assets, which has become an expected part of crypto bull markets.
The biggest issue, according to Wintermute, is that new money coming into the crypto market is confined to custodial investment vehicles, such as exchange-traded funds and digital asset treasuries.
This, Wintermute said, narrowed the market in 2025.
The result is less liquidity rotating across different assets, shrinking the duration of altcoin rallies by 66% compared to previous years and capping the returns these assets can achieve.
An altcoin recovery will require ETFs and DATs to widen their mandates — either by launching more altcoin ETFs or investing directly, Wintermute said.
No alt season?
Altcoins, a broad term for most crypto assets beyond Bitcoin and stablecoins, have underperformed traders’ expectations in recent years.
In previous crypto bull markets, Bitcoin was usually the first asset to rally, followed by smaller assets like Ethereum and Solana as traders rotated their profits, hunting for higher returns.
Despite Bitcoin rallying to an all-time high of $126,000 in October, this altcoin rotation hasn’t played out.
Wintermute isn’t the only one to notice.
Saad Ahmed, head of APAC at crypto exchange Gemini, told DL News in December that crypto trading is increasingly dominated by institutions that invest on longer time scales and are less sensitive to short-term price fluctuations.
This dynamic has dampened a potential altcoin rotation, Ahmed said.
Retail fades crypto
The second thing that could cause altcoins to rally is another Bitcoin rally, according to Wintermute.
Even with ETF and DAT-dominated crypto inflows, a new all-time high for the top crypto could still generate a wealth effect that spills over into the broader market.
Analysts are hopeful for another Bitcoin rally following the passing of the Clarity Act, a bipartisan crypto market structure bill that will provide a comprehensive suite of regulations for the $3.1 trillion industry.
The third and least likely catalyst for an altcoin upswing is a return of retail investor mindshare to crypto.
According to Wintermute, crypto is no longer the go-to risk asset for retail investors.
Democratised market access has made investing in public companies at the cutting edge of technologies like artificial intelligence more accessible for retail investors.
Such investments offer similar risk profiles, narratives, and return potential, drawing attention away from crypto, Wintermute said.
If this trend reverses, it could bring back money to the crypto market. It’s not clear what might make that happen.
“In 2026, outcomes will depend on whether one of these catalysts meaningfully broadens liquidity beyond a handful of large-cap assets, or whether concentration persists,” Wintermute said.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
