Ten years ago, the crypto market was simple: when bitcoin surged, some 500 or more alternative cryptocurrencies followed suit; when it plunged, the entire market collapsed. Wallets spread across “diverse tokens” with unique use cases seemed diverse on paper, but collapsed during Bitcoin’s falls.
Fast forward to 2026, and very little has changed, even though the number of altcoins has increased to several thousand.
Although institutions are expected to present crypto as a multifaceted asset class akin to stocks, with each project presenting distinct investment appeal, the reality is grim. The market remains a one-trick pony, following BTC up and down, offering no real diversification.
The evolution of prices since the start of the year underlines this fact. Bitcoin price fell 14% to $75,000, the lowest since April last year, with almost all major and minor tokens bleeding a similar amount, if not more.
CoinDesk has 16 indexes that track the performance of various coins with unique use cases and appeal, and almost all of them are down 15-19% this year. Indices related to DeFi, smart contracts and IT coins are down 20-25%.
Here’s where it gets more alarming: Tokens tied to real-world revenue-generating blockchain protocols have fallen alongside BTC.
According to DefiLlama, decentralized exchanges and lending and borrowing protocols like Hyperliquid, Pump, Aave, Jupiter, Aerodrome, Ligther, Base and layer 1 blockchains like Tron are among the top revenue generators over the last 30 days. This stands in stark contrast to Bitcoin, which has recently failed to withstand its dual use as digital gold and payment infrastructure.
The native tokens of most of these protocols are in the red. For example, the AAVE token of the leading Ethereum-based lending and borrowing protocol, Aave, fell 26%. Hyperliquid’s HYPE stands alone, up 20%, even after a decline from $34.80 to $30, fueled by the rise of gold and silver token trading.
This disappointing trend is the result of a popular narrative that characterizes large-cap tokens like bitcoin, ether and solana as safe havens (safe pockets during downturns) while labeling revenue-generating projects as volatile, according to some observers.
“The jokers who run this industry will keep telling you that BTC, ETH and SOL are the ‘major safe havens’ — meanwhile the only things that make money in a downturn are $HYPE, $PUMP, $AAVE, $AERO and some other DeFi protocols,” Jeff Dorman, chief investment officer at Arca, said on X.
He added that the crypto industry needs to take a page from traditional markets by building consensus around truly resilient sectors, such as DeFi platforms, and strengthening their safe-haven appeal through exchanges, analysts and funds.
Just as Wall Street brokers and research firms have designated “consumer staples” or “investment grade bonds” as recession darlings, turning data into price outperformance during bear markets, crypto must anoint and promote its safe havens to make them real.
“Why do you think some bonds and corporate stocks do better than others in an economic downturn? Because the industry has decided that certain sectors are ‘defensive’ — consumer staples, utilities, health care, etc.,” Dorman said.
Quasi-species play spoilsport
According to Markus Thielen, founder of 10x Research, part of the problem lies with stablecoins, digital tokens whose values are tied to an external reference, such as the US dollar. These are often considered cash equivalents. So when the largest cryptocurrency falls, traders de-risk their portfolios by switching to stablecoins.
“Unlike stock markets, where capital must generally remain invested, the rise of stablecoins has fundamentally changed positioning in crypto. Stablecoins allow investors to quickly move from bullish to neutral exposure, effectively serving as a defensive allocation within the crypto market,” Thielen told CoinDesk.
He added that bitcoin has historically been the most dominant cryptocurrency, consistently accounting for more than 50% of the total digital asset market value. This makes diversification more difficult.
“(Still) among major tokens, BNB and TRX have historically behaved more defensively, with TRX exhibiting the strongest defensive characteristics,” he noted. TRX is down just 1% this year, outpacing BTC’s steeper decline.
Looking to the future
Institutional participation in the bitcoin market exploded after the launch of spot ETFs in the United States two years ago. This is evident from BTC’s share of the total crypto market, which has since been above 50%.
This trend is unlikely to change, meaning the prospects for a broader crypto market decoupling from bitcoin appear bleak.
“It will continue to focus on BTC, as the current downturn helps kill zombie projects and unprofitable companies,” Jimmy Yang, co-founder of institutional liquidity provider Orbit Markets.
