Why altcoins are stuck: funding spikes and a crowd of leveraged longs
The 2025 cycle has exposed a clear split in the crypto market. Historically, Bitcoin’s post‑halving runs powered broad market rallies: supply scarcity and strong demand sent BTC higher and often dragged altcoins up with it. This time was different — Bitcoin closed 2025 down about 6%, and altcoins have struggled even more.
What the data shows
- TOTAL3 (market cap excluding BTC and ETH) recorded its fourth consecutive year of underperformance versus Bitcoin, effectively capping what used to be known as “altseason.” (Source: TradingView, TOTAL3/BTC.)
- Bitcoin dominance (BTC.D) has posted four straight uptrends, climbing from roughly 40% in 2022 to north of 60% in 2025.
- That dominance shift corresponds to roughly a 100% gain in Bitcoin’s market cap — about $900 billion added. Over the same period total crypto market cap rose to $1.11 trillion, meaning nearly 80% of net new capital flowed into Bitcoin.
Contrast with 2021
- The 2021 cycle was the classic altcoin season: BTC market cap closed the year up ~64% and cracked the historic $1 trillion mark.
- TOTAL3 exploded even more, rallying ~541% that year — the Altcoin Season Index peaked as capital rotated heavily into the broader alt market.
What changed — and why alts are vulnerable now
- Funding rates for many altcoins have spiked: leveraged long positions are overcrowded. While heavy long positioning may look bullish, it creates fragility. In a crowded leverage environment, even a small sideways or slightly negative move can trigger chained liquidations, amplifying volatility and driving prices sharply lower.
- With BTC.D rising, alts are more exposed to Bitcoin’s movements. Sharp swings in BTC or brief corrections can force liquidations in alt markets, worsening downside pressure.
- Put together, elevated funding rates + concentrated leverage + rising Bitcoin dominance has trapped altcoins in a high-risk loop — which helps explain why the divergence between BTC and alts in 2025 isn’t just noise.
Bottom line
The market structure today — capital heavily favoring Bitcoin and altcoins crowded with leveraged longs — makes a repeat of 2021’s broad altcoin season unlikely in the near term. The data suggests 2021 may have been the last “true” altseason until the market’s risk dynamics and capital allocation shift again.
Disclaimer: This content is informational only and not investment advice. Cryptocurrency trading carries high risk; do your own research before making decisions. © 2026 AMBCrypto
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