Despite thousands of alternative tokens and growing institutional adoption, crypto markets in 2026 remain heavily tied to bitcoin, offering little real diversification.
A decade ago, crypto was straightforward: when bitcoin rallied, hundreds of altcoins followed; when it fell, the entire market dropped. Even portfolios spread across tokens with unique use cases crumbled during BTC sell-offs. Fast forward to 2026, and the pattern persists, despite the number of altcoins now numbering in the thousands.
Institutions often tout crypto as a multi-faceted asset class, highlighting individual projects’ distinct use cases. In practice, however, most tokens still mirror bitcoin’s movements. Year-to-date, BTC has fallen 14% to $75,000, its lowest level since April last year, while nearly all major and minor altcoins have suffered similar or worse losses. CoinDesk tracks 16 indices covering various token categories; most are down 15%–19%, with DeFi, smart contract, and computing-focused indexes off 20%–25%.
Even revenue-generating tokens tied to blockchain protocols have dropped alongside BTC. DefiLlama data shows decentralized exchanges and lending platforms such as Hyperliquid, Pump, Aave, Jupiter, Aerodrome, Lighter, Base, and layer-1 blockchains like Tron among the top revenue generators over the past month. Yet most of these tokens are in the red. Ethereum-based lending protocol Aave’s AAVE token has declined 26%, while Hyperliquid’s HYPE stands out with a 20% gain, buoyed by tokenized gold and silver trading.
Experts say the persistent narrative framing BTC, ETH, and SOL as “safe-haven” assets contributes to the trend, leaving genuinely resilient projects overlooked. “The only things that make money in downturns are DeFi protocols like $HYPE, $PUMP, $AAVE, and $AERO,” said Jeff Dorman, CIO at Arca. He urged the industry to designate and promote true crypto safe havens, as traditional markets do with defensive sectors like consumer staples and investment-grade bonds.
Stablecoins have also shifted market dynamics. Markus Thielen, founder of 10x Research, noted that they act as cash equivalents, enabling traders to de-risk quickly during downturns. “Unlike equity markets, crypto allows rapid shifts to neutral positions through stablecoins, serving as the defensive allocation in the market,” he said.
Bitcoin’s dominance—consistently over 50% of total crypto market value—reinforces this pattern. Among major tokens, BNB and TRX have historically acted more defensively, with TRX down just 1% this year, outperforming BTC.
Institutional inflows, bolstered by U.S. spot ETFs, have further concentrated the market around bitcoin. “This trend will continue as downturns eliminate unprofitable projects,” said Jimmy Yang, co-founder of Orbit Markets.
For now, despite thousands of altcoins and growing adoption, crypto remains tethered to bitcoin’s performance, leaving diversification elusive.
