$ETH Will altcoins remain trapped in the cryptocurrency winter for longer?

Altcoins are expected to continue underperforming, as Bitcoin attracts most of the market attention and liquidity amid structural headwinds and a broad retreat from investors.

The cryptocurrency market is currently stuck in a "single-core" mode, said analyst Pat Zhang.

"Bitcoin continues to rise, while altcoins remain trapped in a liquidity desert."

According to Zhang, one of the main drivers of the divergence is the lack of compelling narratives or the growth in the number of users in the altcoin universe.

Occasional hot trends do not gain momentum. Memecoins have outperformed heavier funded projects, reflecting investor fatigue regarding tokens with uncertain utility or appreciation potential.

There is also a significant shift in venture capital.

In the first quarter, 57% of global venture capital funding went to AI and machine learning startups, while cryptocurrency startups attracted only $4.8 billion, nearly half of which came from a single investor.

Major cryptocurrency funds have slowed down new deployments and paused token launches, signaling the end of the initial altcoin cycle.

Bitcoin's market share has risen to 64.4%, its highest level in four years, while the market capitalization of altcoins, excluding Bitcoin and Ethereum, has fallen 22% year-to-date, marking its worst performance since 2020.

Zhang noted that the current environment resembles the early phase of the bull market in 2019-2020, when capital remained concentrated in Bitcoin.

Until we see clear signs of capital rotation, such as Bitcoin peaking and entering a multi-week consolidation, altcoins are likely to continue underperforming, he said.