A decade ago, the crypto market was straightforward: When bitcoin rose, some 500 or more alternative cryptocurrencies followed suit; when it dipped, the whole market crashed. Portfolios spread across “various 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 as the number of altcoins has grown into the thousands.
Despite institutions allegedly painting crypto as a multifaceted asset class akin to stocks, with each project boasting a distinct investment appeal, the reality is grim. The market is still a one-trick pony, following BTC up and down, offering no real diversification.
The year-to-date price action underscores this fact. Bitcoin’s price has fallen 14% to $75,000, its lowest since last April, with almost all major and minor tokens hemorrhaging by a similar amount, if not more.
CoinDesk has 16 indices that track the performance of different coins with unique use cases and appeal, and almost all of them are down 15% to 19% this year. Indices linked to DeFi, smart contract and computer coins are down 20%-25%.
This is where it gets more alarming: Tokens tied to blockchain protocols that generate real income have coincided with BTC.
According to DefiLlama, decentralized exchanges and lending and borrowing protocols such as Hyperliquid, Pump, Aave, Jupiter, Aerodrome, Ligther, Base and layer 1 blockchains such as Tron are among the leading revenue generators over the past 30 days. This is in stark contrast to bitcoin, which has recently failed to live up to its dual use case as digital gold and a payment infrastructure.
The native tokens for most of these protocols are in red. For example, the leading Ethereum-based lending and borrowing protocol Aave’s AAVE token has fallen 26%. Hyperliquid’s HYPE stands alone, up 20% even after retreating from $34.80 to $30, driven by booming tokenized gold and silver trading.
The disappointing trend is the result of a popular narrative that labels major-cap tokens like bitcoin, ether and solana as safe havens (safe pockets during downturns) while calling revenue-generating projects ephemeral, according to some observers.
“Jokers running this industry will keep telling you that BTC, ETH and SOL are ‘safe haven majors’ – meanwhile the only things that make money in downturns are $HYPE, $PUMP, $AAVE, $AERO and some other DeFi protocols,” said Jeff Dorman, chief investment officer at Arca, 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 hammer home their sanctuary appeal via exchanges, analysts and funds.
Just as Wall Street brokers and research firms etched “consumer staples” or “investment-grade bonds” as recession darlings, and turned data into bear market price overshoots, 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 that certain sectors were ‘defensive’ — consumer staples, utilities, health care, 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 tied to an external reference, such as the US dollar. These are often seen as liquid assets. And then, when the biggest cryptocurrency falls, traders de-risk their portfolios by moving into stablecoins.
“Unlike stock markets – where capital is typically required to stay invested – the rise of stablecoins has fundamentally changed positioning in crypto. Stablecoins allow investors to quickly switch from bullish to neutral exposure, effectively acting 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 market value of digital assets. This makes it more difficult 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 decline.
Looking ahead
Institutional participation in the bitcoin market boomed after the debut of spot ETFs in the US two years ago. This is evident from BTC’s share of the total crypto market, which has held over 50% since then.
This trend is unlikely to change, meaning the prospects for a wider decoupling of the crypto market from bitcoin look bleak.
“It will continue to concentrate on BTC as the ongoing downturn helps kill zombie projects and unprofitable businesses,” Jimmy Yang, co-founder of institutional liquidity provider Orbit Markets.
