10-4-2025 – The alternative cryptocurrency sector has experienced a precipitous decline in recent months, shedding more than 40% of its market capitalisation since reaching its zenith last December. What was once a trillion-dollar market has contracted dramatically to $583 billion, reflecting broader concerns about liquidity and investor sentiment.
This market contraction coincides with mounting apprehension regarding President Trump’s aggressive tariff policies, which have begun to affect higher-risk investments, including the cryptocurrency ecosystem.
Market structure breakdown
Glassnode’s analytical charts reveal a troubling picture of synchronised depreciation across the alternative cryptocurrency spectrum, irrespective of individual tokens’ focus or utility. The pronounced divergence between short-term and monthly moving averages indicates a fundamental shift in market dynamics, with technical indicators now signalling the conclusion of the altcoin momentum phase.
Positioned at the periphery of the risk spectrum, these smaller digital assets typically experience heightened vulnerability during periods of market stress compared to established cryptocurrencies like Bitcoin or Ethereum. The announcement of new tariff measures served as the catalyst that exposed fragile investor conviction.
Temporary relief or sustained recovery?
Over the past day, several prominent altcoins including Chainlink, Solana and Cardano have mounted a modest recovery following a protracted period of decline. However, market analysts remain sceptical about the durability of this upward movement.
The characteristics of the recent price action suggest a technical correction driven primarily by oversold conditions rather than substantive improvements in market fundamentals or renewed capital investment. The conspicuous absence of movement in Ethereum prices further undermines confidence in the sustainability of this brief resurgence.
Structural vulnerabilities persist
The alternative cryptocurrency market continues to face significant headwinds despite temporary price improvements. Investment capital has adopted a notably cautious stance, either concentrating in established assets like Bitcoin or retreating to stablecoins as defensive positions.
Ethereum’s underwhelming performance—posting gains of just 1.99% while other assets experienced more significant rebounds—highlights the pervading risk aversion. Additionally, many tokens remain underwater relative to their acquisition costs, with negative MVRV ratios indicating widespread unrealised losses among holders.
The Ethereum-to-Bitcoin ratio hovering near recent lows provides further evidence of conservative capital allocation strategies, as investors favour the perceived safety of Bitcoin over other digital assets.
Without a meaningful shift in capital flows down the risk curve, alternative cryptocurrencies appear poised to remain in a reactive state rather than demonstrating genuine market resilience.
