Retail traders miss $800 billion betting against Bitcoin dominance

Despite waiting for an “altcoin season” that never materialized for two years, retail crypto traders have missed out on nearly $800 billion in potential gains by betting against Bitcoin’s dominance.

According to a new report from 10x Research, altcoins have significantly underperformed Bitcoin during this cycle, making it one of the largest relative underperformances since 2017.

This data underscores a significant shift in the market structure, which is now more influenced by institutional flows, Bitcoin ETFs, and risk aversion rather than the speculative rotation patterns seen in previous bull markets.

Retail Investors Anticipate an Elusive Altcoin Season

Traditionally, an altcoin season refers to a period when smaller cryptocurrencies outperform Bitcoin, attracting capital away from the benchmark asset and offering substantial short-term returns.

In previous cycles, particularly in 2017 and 2021, profits from Bitcoin flowed into Ethereum, then into mid-caps and meme tokens.

However, 10x Research pointed out that this cycle has seen a reversal of that trend. Instead of rotation, liquidity has consolidated around Bitcoin.

The firm’s data indicates that investors have shifted heavily towards BTC-denominated products and away from higher-risk tokens.

According to the report:

“Over the last 30 days, our tactical altcoin model has favored Bitcoin over altcoins, signaling a rebound in Bitcoin dominance. This change follows a 75-day period during which the model preferred altcoins, coinciding with Ethereum’s surge, but that trend has clearly ended.”

Additionally, 10x Research noted that Korean retail traders, who were previously known for driving altcoin speculation, have also moved away from this trade.

For instance, data from Messari indicates that Upbit, the largest crypto exchange in South Korea, has experienced a significant decline in trading volume this year as traders shift towards US-listed crypto equities like Coinbase and MicroStrategy.

According to 10x Research, this migration has led to a drain in both liquidity and conviction within the altcoin market.

Previous reports from CryptoSlate also support this claim, highlighting how altcoins have stagnated in comparison to Bitcoin.

The report reveals that Bitcoin’s market cap surpassed $2.3 trillion in early October, reaching a new all-time high of approximately $126,000. In contrast, the total altcoin market cap (excluding stablecoins) has remained below its peak of $1.6 trillion in November 2021.

By mid-October, TOTAL2ES had only reached $1.48 trillion, falling short of its previous peak by around $120 billion, even as Bitcoin exceeded its own peak by 84%. This $800 billion missed gain figure from 10x Research stems from this gap.

10x Research stated:

“Liquidity, momentum, and conviction have all shifted elsewhere, leaving the altcoin market strangely quiet.”

With this in mind, Coinperp’s Altcoin Season Index, which tracks the performance of the top 100 tokens against Bitcoin over 90 days, only managed to surpass 70 briefly in early September—below the 75 threshold that defines a true alt season, and has since dropped to 13 as of the current time.

Altcoins Lose Steam

Bitget CEO Gracy Chen suggests that the issue runs deeper than just temporary sentiment.

She highlighted that venture capital investment in early-stage Web3 projects has declined significantly, depriving the sector of new narratives and token launches.

A report from Galaxy Research revealed that crypto VC activity is notably subdued compared to previous bull markets. The second quarter of 2025 saw the second-lowest venture investment in crypto and blockchain startups since Q4 2020.

Chen also mentioned that the market shock on October 11, which wiped out roughly $20 billion from leveraged crypto traders, dealt a significant blow to altcoins.

She stated:

“Retail investors engaging in altcoin trading are facing a precarious risk-reward scenario.”

Given these circumstances, the Bitget CEO believes that a widespread altcoin season is unlikely to occur in 2025 or 2026.

However, she noted that there may be exceptions for projects issuing infrastructure tokens linked to real-world assets (RWA), stablecoins, and payment protocols.

Chen argues that these “infrastructure plays,” which are less likely to issue volatile native tokens, could drive the next phase of growth. Ripple’s cross-border payment network, Circle’s USDC ecosystem, and tokenized-treasury platforms already demonstrate that the focus is shifting from speculation to utility.

Nevertheless, there is still retail interest. Global search interest for “altcoin” reached its highest level in five years in August, matching the excitement levels seen during Ethereum’s surge in 2018.

The Influence of Institutions on the Market

Unlike the retail-driven frenzy of 2021, the current cycle has been shaped by institutional capital.

According to 10x Research, the approval of spot Bitcoin ETFs, participation from corporate treasuries, and the rise of yield-bearing stablecoins have redefined what constitutes safe exposure to crypto.

Spot crypto ETFs have attracted record inflows of over $40 billion in new capital this year, outperforming other markets significantly.

As a result, retail traders seeking quick returns on altcoins have found themselves on the sidelines. Even modest rallies in assets like Solana or Avalanche have quickly faded due to thin order books and limited fundamental catalysts.