Analysis: Since December 2024, the altcoin market outside of Bitcoin has been in a bear market, and the performance of altcoins still lags behind market expectations.

BlockBeats News, February 9 — According to The Block, Bitcoin suddenly plummeted over 20% this week, although prices have partially recovered since. Several crypto fund managers stated that this drop caught them off guard. Zaheer Ebtikar, Founder and Chief Investment Officer of Split Capital, said: “I think almost no one truly expected such a rapid wave of panic selling.” A common view among interviewees is that the issue wasn’t caused by a single clear trigger, but rather by the speed of the market collapse: sentiment quickly shifted, panic indicators soared, a large volume of spot sales triggered chain reactions of liquidations, resulting in a cascade of declines.

L1D AG Co-Founder and Managing Partner Ray Hindi said: “Many traditional finance (TradFi) related themes became excessively stretched and crowded during January. The subsequent sharp deleveraging and retracement will transmit shocks to the crypto market, which is still dealing with serious, unresolved structural issues left over from the October 10 liquidation event.” He believes this decline also reflects a process of structural cleanup in the market. This reshuffling helps eliminate excesses and allows truly useful projects to stand out.

Cosmo Jiang, General Partner at Pantera Capital and head of the company’s liquid token strategy, said that recent volatility is part of the trend accumulated over the past few months. He pointed out that since December 2024, the non-Bitcoin token market has actually been in a bear market, describing this year’s trend so far as a “rolling bear market” that continues across most altcoins. Due to the spreading pressure on risk assets and accelerated selling pressure, traders who previously shifted to precious metals are now selling crypto assets to meet margin requirements.

Expectations for altcoins to outperform the market remain subdued. Most investment managers say the market is shifting toward high-quality, fundamentals-driven investments. Joscha Kuplewatzky of Wintermute Ventures stated that the market may currently be in the late stage of the cycle, making it unsuitable to bet on altcoins outperforming overall. He believes that unless retail investors become active again, any upward movement is more likely to be short-term and sector-specific. Additionally, several investors noted that cryptocurrencies are no longer the first choice for new capital.