The Great Transfer of Wealth from Bitcoin to Altcoins Has Begun

The altcoin market has reached a critical juncture. After two years of relentless underperformance against Bitcoin, altcoins are now showing a level of historic weakness that has, in the past, been the prelude to a major market reversal.

Altcoin Weakness Hits a Historic Extreme

Data shared by analyst Michael van de Poppe shows that only 8% of altcoins (excluding stablecoins) have outperformed Bitcoin over a rolling 90-day period, the lowest level in the past two years, and one of the weakest since 2019.

“Right now, the #Altcoins are the heaviest underperforming vs. Bitcoin for the past 2 years,” van de Poppe noted, adding that the last bottom formations in June 2022 and June 2023 marked major altcoin rallies.

Historically, when the percentage of outperforming altcoins falls to single digits, it has signaled the start of a new rotation phase, often triggering what the crypto world calls altseason.

Related: Over $150 Million in Token Unlocks Scheduled This Week for Altcoins SUI, ENA, and OP

Too Many Tokens, Not Enough Buyers

A major headwind preventing a simple repeat of past cycles is a massive oversupply of new tokens.

According to Dune Analytics, the number of unique crypto tokens has increased nearly 10x over the past three years across eight major blockchains, affecting investor attention and liquidity.

The typical “Bitcoin pumps first, then altcoins” model is breaking down. In past cycles, wealth created during Bitcoin rallies would rotate into major altcoins and mid-caps. But the oversaturation of tokens, many without clear use cases, is diluting that rotation.

Binance Research stated that previous market rallies have been dominated by ICOs and DeFi narratives but this time, the market cycle lacks a dominant unifying theme. Meme coins, BitcoinFi, and DePIN were popular but did not bring anything new to the table.

Even the AI narrative that pushed stocks like Nvidia to multi-year highs last year have failed to translate into meaningful gains and adoption. This lack of a compelling “why” behind altcoins is suppressing new demand, especially from institutional players who need clear narratives and lower risk.\

What Does the Altcoin Market Chart Show?

Despite the fundamental challenges, the chart for the total altcoin market cap (TOTAL3), which excludes Bitcoin and Ethereum, presents a technically bullish setup.

RSI, MACD, and Fib levels for Total 3 chart

TOTAL3 has held support at the $1.01 trillion level (0.0 Fibonacci retracement) and has recently reclaimed the 0.382 ($1.1T) and 0.5 ($1.13T) retracement levels. The current price hovers around $1.14T, flirting with the 0.618 Fib level at $1.15T, a critical breakout zone.

Related: Crypto Market Shift Incoming: BTC Dominance Weakening, Altcoins Gaining Strength

If this level is decisively breached, the next major targets lie at the 1.618 Fib extension ($1.4 trillion) and 2.618 Fib extension ($1.64 trillion). These targets imply a 20–40% upside for the broader altcoin market, depending on how capital flows evolve.