The Current Bitcoin Bull Market vs. Previous Ones

Why Altcoins Are Lagging Behind

The ongoing Bitcoin bull market has captivated investors with its explosive growth and institutional interest. However, one noticeable difference in this cycle compared to previous bull runs is the underperformance of Atcoins.

Unlike in 2017 or 2021, when a rising Bitcoin tide lifted all ships, altcoins this time are struggling to gain momentum. Below, we explore the dynamics at play, focusing on the influence of institutional ETFs, the role of large investors, and what this could mean for the potential endgame of this bull market, possibly with only a short lived “Altcoin season.”

Bitcoin’s current rally is fundamentally different from prior cycles because of who is driving the demand. Historically, retail investors fueled price surges, speculating en masse during euphoric market conditions. This time, however, institutional actors are playing a dominant role.

The approval of spot Bitcoin ETFs in major markets, especially the United States has opened the door for pension funds, hedge funds, family offices, and other regulated entities to allocate capital to Bitcoin. Products like BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin ETF have attracted billions of dollars, creating steady and predictable demand.

These large investors tend to be less speculative than retail traders. They are not necessarily interested in high risk, high reward Altcoins. Instead, they see Bitcoin as a digital gold a store of value with liquidity, regulatory clarity, and now, accessible vehicles to invest through familiar brokerage accounts.

Altcoins are underperforming for several key reasons:

  • Institutional Focus on Bitcoin and, to a lesser extent, Ethereum: ETFs and regulated funds are only approved for Bitcoin (and soon Ethereum). There are no ETFs or compliant vehicles for Solana, Cardano, Avalanche, or countless smaller projects. This limits institutional flows to Bitcoin and Ethereum, leaving altcoins largely dependent on retail capital, which is still cautious in the wake of the 2022 crash.
  • Higher Regulatory Scrutiny: Many altcoins remain under a cloud of regulatory uncertainty, with ongoing SEC actions against some projects being labeled as securities. This makes large investors wary of allocating to them.
  • Liquidity Preference: Bitcoin and Ethereum dominate crypto market liquidity. For large investors, entering and exiting positions in smaller altcoins is risky and costly, making them unattractive at scale.
  • Market Psychology: Retail investors, the traditional buyers of altcoins, are showing more caution this cycle. Burned by the dramatic crashes of 2022, they may not yet feel the same euphoria needed to propel speculative altcoins higher.

The emergence of institutional ETFs is reshaping market dynamics. Big investors such as BlackRock, Fidelity, Ark Invest, and Grayscale have become significant players. Their large and steady flows into Bitcoin contribute to a more orderly, less volatile bull market, but also one where speculative mania is less evident.

These actors are less likely to rotate capital into Altcoins. For them, Bitcoin offers asymmetric upside while still fitting into a risk managed portfolio. Without their participation, Altcoins remain starved of capital inflows.

Historically, Bitcoin bull markets end in one of two ways: either a euphoric blow off top or a gradual exhaustion of buyers followed by a steep correction. If history repeats, we may still see a short lived “altcoin season” near the cycle’s peak, as retail investors eventually chase higher returns and FOMO into smaller coins.

However, this Altcoin season could be shorter and more muted than in past cycles. Institutional dominance may keep Bitcoin and Ethereum steady even as Altcoins briefly spike and then crash harder. Furthermore, if ETFs continue to absorb flows, capital may not rotate into Altcoins in the same way as before.

The current bull market signals a maturing crypto asset class, with Bitcoin becoming increasingly institutionalized. Altcoins, however, are not benefiting from this shift to the same degree. Without regulatory clarity and institutional products for them, they remain reliant on retail enthusiasm and that enthusiasm is more cautious today.

While a short lived Altcoin rally may still occur if retail mania takes hold at the cycle’s peak, the broader picture suggests that Bitcoin and Ethereum will dominate this cycle, while Altcoins may continue to lag behind.