The sharp decline in altcoins over the past 12 months may reflect a broader reassessment of which blockchain networks are prone to attract long-term capital as institutional investors begin a gradual, multi-year entry into the market, analysts say.
Without Bitcoin (BTC), 2025 proved to be a bear marketplace for the broader cryptocurrency market. Decentralized finance (DeFi) tokens fell 67%, while cryptocurrencies linked to smart contract blockchains delivered a negative average return of 66%, in accordance with blockchain data from Jamie Coutts, chief crypto analyst at Real Vision.
Last 12 months's poor performance was a “re-evaluation” of leading crypto projects as institutional capital sought greater exposure, Coutts wrote in a Wednesday X post.
“Re-evaluating the best quality protocols/L1s (network adoption, fundamentally sound) just because the multi-year commitment of institutional capital begins,” he said.
Smart contract platforms and Defi tokens, historical annual performance. Source: Jamie Coutts
Coutts is the newest analyst to point to an ongoing reassessment of cryptocurrency valuations as mature digital asset investors seek exposure to tokens that power protocols with organic usage and revenue, quite than simply general altcoins.
According to crypto intelligence platform Nansen, Solana was the leading blockchain by fees last 12 months with $585 million in revenue, while Tron was in second place with $576 million in revenue.
Blockchain networks by key metrics including lively addresses and costs, one-year chart. Source: Nansen
According to Nicolai Sondergaard, research analyst at Nansen, institutional and enormous investors are leaning towards the highest five cryptocurrencies.
“Solana ETFs are still seeing inflows, but the identical can't quite be said on-chain. ETH, then again, has seen some players migrate away from BTC,” the analyst told Cointelegraph, adding:
“Many assume that major players are preparing for the return of liquidity by accumulating, and this appears to be correct based on on-chain and off-chain data.”
Despite the altcoin bear market in 2025, institutions are launching regulated altcoin investment vehicles
Despite last 12 months's poor performance, major financial institutions proceed to launch regulated crypto investment products, including US investment bank Morgan Stanley.
Morgan Stanley filed on Tuesday to launch two cryptocurrency exchange-traded funds (ETFs) — one tied to Bitcoin and the opposite to Solana — followed by news on Wednesday that a 3rd ETF application was also filed on Tuesday and is tied to Ether (ETH), signaling a stronger crypto push from Wall Street participants.
However, industry participants have made combined predictions concerning the development of the cryptocurrency market in 2026.
While the founding father of Hong Kong-based investment firm Trend Research, Jack Yi, said he was “optimistic” about crypto for the primary half of 2026, Fundstrat Global Advisors predicted a neighborhood Ether low of around $1,800 in the primary quarter of the 12 months, Cointelegraph reported.
Source: AlejandroBTC
However, an internal note from Fundstrat co-founder and managing partner Tom Lee also predicted a “year-end” rally after crypto markets hit a “everlasting low” in the primary quarter.
Lee can also be chairman of BitMine Immersion Technologies, the most important corporate Ether holder with a complete ETH holdings of $13 billion.
However, in accordance with Lacie Zhang, market analyst at Bitget Wallet, the excessive leverage of the previous 12 months has been “removed,” bringing cryptocurrency valuations back to “levels consistent with institutional entry thresholds” amid increasing regulatory clarity.
More regulated crypto ETFs and bipartisan progress on crypto laws suggest that “2026 could mark a turning point from revaluation to sustainable accumulation that’s more anchored in long-term institutional acceptance,” the analyst told Cointelegraph.
