DeFi and Layer-2 Tokens Surge as Bitcoin Hits New High, Leaving Older Cryptos in the Dust
Bitcoin’s record-breaking run above previous highs on Thursday has sparked sharply divergent reactions among altcoins, revealing a new divide in the crypto market. The split is increasingly drawn along sector lines.
Tokens tied to decentralized finance (DeFi) and layer-2 blockchains are outpacing the broader market as investors shift into riskier plays. Meanwhile, more established coins like Tron (TRX at $0.3007), Bitcoin Cash (BCH at $509.78), Litecoin (LTC at $92.74), and Monero (XMR at $329.03) are treading water by comparison.
Even Solana (SOL)—once the poster child of prior bull runs—has only managed a modest 3.9% gain. By contrast, newer tokens such as Sei (SEI at $0.3280), Ethena (ENA at $0.3252), and Optimism (OP at $0.6470) are posting impressive rallies, soaring as much as 28%.
“Altcoins are leading the pack in this latest rally,” said Thomas Perfumo, global economist at Kraken, in an email. He noted Bitcoin’s market dominance fell from 64% to 63.5% during the surge, signaling fresh interest in the altcoin sector.
This dynamic contrasts with past crypto bull runs—in both 2017 and 2021, Bitcoin dominance typically rose in tandem with price gains. This time, the landscape appears to be shifting, likely influenced by increased institutional participation.
Institutions Behind the Shift
Crypto markets are known for their relentless, 24/7 volatility. Historically, altcoins have moved as a bloc—climbing when Bitcoin paused, then falling when Bitcoin made big swings. But this cycle is showing signs of a new pattern, driven by institutional players exploring opportunities beyond Bitcoin.
DeFi tokens, in particular, are enjoying renewed attention as institutional investors eye Ethereum (ETH) and pursue yield-generating strategies.
Layer-2 networks are also benefiting as solutions to Ethereum’s persistent congestion and speed issues. Arbitrum, for instance, enables faster movement of liquidity across decentralized apps and staking platforms. Its native token ARB has jumped 15% over the past day.
Some Remain Skeptical
Yet not everyone is convinced the altcoin rally can last. Petr Kozyakov, CEO at payments firm Mercuryo, urged caution.
“While altcoins are also in the green with Ethereum spiking past the $3,000 mark, the underlying ‘orange pill’ narrative remains steadfastly in place,” he said. “Bitcoin’s growing status as a store of value is one that more and more big players and institutions are simply unable to ignore.”
Meanwhile, Arthur Hayes, the BitMEX founder turned fund manager, sees things differently.
“Get ready for a monster alt season,” Hayes declared on X, predicting ETH could hit $10,000 this cycle.
If Hayes proves right, Bitcoin may see near-term headwinds as capital rotates into altcoins. That could spell even more trouble for older “OG” coins like LTC, BCH, and XMR, which continue to lack the catalysts needed to reignite investor interest.
