Analysis: Since December 2024, the token market has been in a bear market except for Bitcoin, with altcoins underperforming market expectations.

On February 9, The Block reported that Bitcoin plunged more than 20% this week in a sudden drop. While prices have since partially recovered, several crypto fund managers said the drop caught them off guard. Zaheer Ebtikar, founder and CIO of Split Capital, noted: “I don’t think almost anyone truly expected panic selling of this scale to hit so fast.” The common take from many interviewees is that the issue wasn’t a single specific trigger—but the speed of the market collapse: a rapid shift in sentiment, spiking panic indicators, massive spot selling triggering cascading liquidations, and a chain reaction of declines. Ray Hindi, co-founder and managing partner at L1D AG, said: “Many TradFi-linked themes were noticeably overstretched and trading crowded in January. The subsequent intense deleveraging and pullback will send shockwaves to the crypto market, which still faces severe unresolved structural issues from the October 10 liquidation event.” He added the decline also reflects a structural cleansing process—one that clears excess and lets truly useful projects rise to the top. Cosmo Jiang, general partner at Pantera Capital and head of its liquid token strategy, said recent volatility is part of a trend built up over the past few months. He noted the non-Bitcoin token market has been in a bear market since December 2024, describing this year’s trend so far as a “rolling bear market” ongoing in most altcoin markets. As pressure spread across risk assets, selling pressure picked up—forcing people who’d previously turned to precious metals to sell crypto to meet margin calls. Expectations for altcoins to outperform the market remain low, with most fund managers saying the market is shifting toward quality, fundamentally driven investments. Joscha Kuplewatzky of Wintermute Ventures said the market may now be in the late cycle—making broad bets on altcoin outperformance unwise. He added unless retail traders jump back in, any uptrend will likely be short-lived and limited to specific sectors. Additionally, many investors say crypto is no longer the top pick for new capital.