A decade ago, the crypto market was straightforward: When bitcoin $BTC$76,540.50 surged, some 500 or more alternative cryptocurrencies followed suit; when it plunged, the entire market crashed. Portfolios spread across “diverse tokens” with unique use cases looked diversified on paper, but cratered during the bitcoin slides.
Fast forward to 2026, and very little has changed, even though the number of altcoins has increased to several thousand.
Despite institutions supposedly painting crypto as a multifaceted asset class akin to stocks, with each project boasting distinct investment appeal, the reality is grim. The market’s still a one-trick pony, following $BTC up and down, offering no real diversification.
The year-to-date price action underlines that fact. Bitcoin’s price has tanked 14% to $75,000, the lowest since April last year, with almost all major and minor tokens bleeding by a similar amount, if not more.
CoinDesk has 16 indices tracking the performance of various coins with unique use cases and appeal, and nearly all are down 15% to 19% this year. Indexes tied to DeFi, smart contract and computing coins are down 20%-25%.
Here’s where it gets more alarming: Tokens tied to blockchain protocols generating real revenue have dropped 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 leading revenue generators over the past 30 days. This starkly contrasts with bitcoin, which has lately failed to hold up to its dual use case as digital gold and a payments infrastructure.
The native tokens of most of these protocols are in the red. For instance, leading Ethereum-based lending and borrowing protocol Aave’s $AAVE token has dropped 26%. Hyperliquid’s $HYPE stands alone, up 20% even after pulling back from $34.80 to $30, fueled by booming tokenized gold and silver trading.
The disappointing trend is the result of a popular narrative that labels large-cap tokens like bitcoin, ether and solana as safe havens (safe pockets during downturns) while calling revenue-generating projects volatile, according to some observers.
“The jokers that run this industry will keep telling you that $BTC, ETH and SOL are the “safe haven majors” — meanwhile the only things that make any money in downturns 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 borrow a page from traditional markets by building consensus around truly resilient sectors, such as DeFi platforms, and hammering their haven appeal home via exchanges, analysts, and funds.
Just as Wall Street brokers and research firms etched “consumer staples” or “investment-grade bonds” as downturn 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 certain corporate bonds and stocks do better than others in downturns? Because the industry decided certain sectors were “defensive” — consumer staples, utilities, healthcare, etc,” Dorman explained.
Cash-equivalents play spoilsport
According to Markus Thielen, founder of 10x Research, part of the problem is stablecoins, digital tokens whose values are pegged to an external reference, such as the U.S. dollar. These are often seen as cash equivalents. And so, when the largest cryptocurrency slides, traders de-risk their portfolios by moving into stablecoins.
“Unlike equity markets—where capital is typically required to remain invested—the rise of stablecoins has fundamentally changed positioning in crypto. Stablecoins allow investors to shift quickly from bullish to neutral exposure, effectively serving as the defensive allocation within the crypto market,” Thielen told CoinDesk.
He added that bitcoin has always been the most dominant cryptocurrency, consistently accounting for over 50% of the total digital asset market value. This makes it harder to diversify.
“[Still] among major tokens, BNB and $TRX have historically behaved more defensively, with $TRX showing the strongest defensive characteristics,” he noted. $TRX is down just 1% this year, outpacing $BTC‘s sharper drop.
Looking ahead
Institutional participation in the bitcoin market boomed after the debut of spot ETFs in the U.S. two years ago. This is evident from $BTC‘s share of the total crypto market, which has held above 50% since then.
This trend is unlikely to change, which means the prospects of wider crypto market decoupling from bitcoin look bleak.
“It will continue to concentrate into $BTC, as the ongoing downturn helps kill off zombie projects and unprofitable businesses,” Jimmy Yang, co-founder of institutional liquidity provider Orbit Markets.
