NEW YORK: On the face of it, 2025 looks like a banner year for crypto: bitcoin hitting a record, an industry-boosting US president whose family is venturing headlong into the sector, and key legislation widely expected to be passed by Congress.
But look beyond the bullish headlines and the rally in bitcoin, and a vastly different landscape comes into view.
Most of the so-called altcoins once touted as competitors to the original cryptoasset are nursing steep declines, with more than US$300bil of market value wiped out so far this year.
The sea of red points to a wider malaise that’s forcing parts of the industry to confront existential questions.
Crypto was imagined by early enthusiasts as a universe where a host of coins competed for investor money, offering a diverse set of use cases. But as bitcoin reigns supreme, that’s giving way to predictions that large swathes of the sector will become a digital wasteland.
“I think they’re just going to die, frankly,” Nick Philpott, co-founder of trading platform Zodia Markets, said of altcoins.
“They’ll just wither away. Technically, a lot of this stuff will just sit there and gather dust in perpetuity.”
Bitcoin’s share of the total market value of cryptoassets has climbed by nine percentage points this year to 64%, the highest since January 2021, according to CoinMarketCap.
Back then, cryptocurrencies were a largely unregulated space, crypto lending was roaring with few safeguards and nonfungible tokens were just starting to take off.
In sharp contrast, altcoins – the catch-all term for all digital assets outside of bitcoin and stablecoins – are faltering.
A MarketVector index tracking the bottom half of the largest 100 digital assets, which more than doubled in the aftermath of Donald Trump’s Nov 5 election victory, has since given up all those gains and is down around 50% in 2025.
With bitcoin soaking up the bulk of capital flows from investors in exchange-traded funds (ETFs), other parts of the market are increasingly left behind.
Even ether, the second-largest cryptocurrency, remains about 50% below its all-time high after a modest rebound fuelled by inflows to spot ETFs investing in the token.
“Historically, bitcoin’s moved and then that’s passed down into altcoins,” said Jake Ostrovskis, an OTC trader at Wintermute. “We’ve not really seen that yet this cycle.”
Crypto is no stranger to mass extinction events. The 2022 market crash, punctuated by the implosions of algorithmic stablecoin TerraUSD and Sam Bankman-Fried’s FTX exchange, led to the demise of hundreds of projects.
Thousands of coins still exist on their blockchains, with little or no activity – relegated to the status of “ghost chains” in crypto parlance.
What’s different this time is that crypto is becoming a more regulated, institutionally-driven marketplace, and that stablecoins appear to be the only tokens with a real shot at achieving means-of-payment status, due to the fact that they eliminate volatility.
In the past year alone, the market value of stablecoins has swelled by US$47bil, and some of the world’s largest banks are entering the field.
The Wall Street Journal reported this month that Amazon.com Inc is studying a potential stablecoin. That’s putting pressure on altcoin projects to find ways to shore up their status and appeal to a wider base of investors. — Bloomberg