The broad consensus is that the crypto market could see another decline in 2026, before a firmer and stronger rebound, reflecting past cyclical patterns.
And with most altcoins already down 70-90% from the late 2024 peak, such an outcome could decimate the segment.
According to Ki Young Ju, CEO of CryptoQuant, the only tokens that can survive such a rout are those with new liquidity via digital asset treasuries (DATs) or ETFs.
He added,
“Altcoin liquidity is drying up. If your altcoin isn’t playing the liquidity game, its long-term risk is likely high.”
Source:
The chart shared by Young Ju showed top crypto assets with DATs and ETFs or higher chances of having one. But most market observers are divided on whether DATs can survive larger sales.
Assessing the impact of DATs
The critics have argued that some DATs are vehicles used by venture capital firms to hedge their altcoin positions and could easily sell out if the market deteriorates even harder.
While the debate has been commonplace for some time, limited data has shown that DATs can sell out quickly to protect mNAV (market-to-net-asset-value), or the valuation of their shares relative to crypto holdings.
SharpLink, for example, abandoned millions of dollars of his ETH holdings to buy back his shares to increase his mNAV.
A similar one fear weighs on Strategy, the largest public company holding BTC amid depressed mNAV.
And the ETF front isn’t just limited to offerings. In November, US spot BTC ETFs saw outflows of $3.5 billion, further limiting the asset’s recovery.
In other words, while DATs and ETFs can be a crucial demand line, they can also be a source of selling pressure, especially during a broader rout.
Performance of Altcoins
Source: Select Altcoin Performance (TradingView)
But performance will vary across the board. For example, on a cumulative basis (YTD), Solana (SOL) decreased by 32%, while Ethereum (ETH) fell by only 16%. Both have DATs and ETFs.
On the other hand, Cardano (ADA) fell by almost 60%, but Bitcoin Cash (BCH) was up 16% over the same period. Both assets have no DAT or ETF.
That said, the fourth quarter crypto rout has destroyed over $600 billion coming from the altcoin market. In fact, the altcoin season index had fallen to 24, indicating that it was a BTC season.
Source: CoinMarketCap
Final Thoughts
- Although it is believed that DATs and ETFs can reduce broader losses in altcoins, they can also accelerate dumping.
- More than $600 billion has been wiped from the altcoin market, and further losses could be likely if the rout deepens.
