Despite thousands of altcoins and growing institutional adoption, crypto markets in 2026 remain largely tethered to bitcoin, offering little true diversification.
A decade ago, the pattern was clear: when BTC rallied, most altcoins followed; when it fell, the entire market dropped. Even portfolios spread across tokens with different use cases collapsed during bitcoin sell-offs. Fast forward to 2026, and the market shows the same behavior, despite a surge in the number of alternative tokens.
Institutions often promote crypto as a multi-faceted asset class, highlighting projects’ unique use cases. In reality, nearly all tokens still mirror BTC’s price action. Year-to-date, bitcoin has declined 14% to $75,000, its lowest level since April 2025, with most major and minor tokens falling by similar or greater amounts. CoinDesk tracks 16 indices representing diverse categories, and nearly all are down 15%–19%, while DeFi, smart contract, and computing-focused indexes have dropped 20%–25%.
Even revenue-generating tokens tied to active protocols have fallen alongside BTC. DefiLlama data highlights decentralized exchanges and lending platforms such as Hyperliquid, Pump, Aave, Jupiter, Aerodrome, Lighter, Base, and layer-1 blockchains like Tron as top revenue generators over the past month. Yet most of these tokens remain in the red. Aave’s AAVE token has fallen 26%, while Hyperliquid’s HYPE is up 20% despite retracing from $34.80 to $30, buoyed by tokenized gold and silver trading.
Experts attribute this to a persistent narrative that frames BTC, ETH, and SOL as “safe-haven” assets while overlooking revenue-generating projects. “The only things that make money in downturns are DeFi protocols like $HYPE, $PUMP, $AAVE, and $AERO,” said Jeff Dorman, CIO at Arca. He called for the industry to promote truly resilient sectors, similar to how consumer staples and investment-grade bonds are designated defensive in traditional markets.
Stablecoins also play a defensive role. Markus Thielen, founder of 10x Research, said they allow investors to move quickly from risk-on to neutral positions, acting as cash equivalents in downturns.
Bitcoin’s dominance—consistently above 50% of total crypto market value—reinforces these trends. Among major tokens, BNB and TRX have historically shown defensive traits, with TRX down just 1% year-to-date. Institutional inflows, fueled by U.S. spot ETFs, have further cemented BTC’s central role.
“Downturns continue to concentrate the market into BTC, clearing out unprofitable projects,” said Jimmy Yang, co-founder of Orbit Markets.
For now, despite thousands of altcoins and increasing adoption, crypto remains firmly tied to bitcoin’s swings, leaving true diversification elusive.
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