Altcoin market voids $800 billion as crypto traders flock to Bitcoin and hedge risk

The altcoin market just lost $800 billion because crypto traders worldwide, especially retail investors in South Korea, moved their attention to Bitcoin and crypto-related stocks instead.

For years, both altcoins and Bitcoin moved together during bull runs and crashes. But not this time. This time, Bitcoin broke away, and altcoins were left behind.

The gap is being blamed on who’s buying what. Big institutions are stacking Bitcoin and piling into listed crypto companies that hoard tokens.

Retail investors, the usual lifeline for altcoins, are pulling out. 10x Research said the altcoin market would be $800 billion higher if retail traders — especially those in Korea — hadn’t switched focus to crypto stocks and equity markets. “Altcoins have failed to attract sufficient new capital,” said Markus Thielen, the CEO and head of research at 10x.

Korean retail turns away from altcoins to chase stocks

South Korea has always been altcoin territory. On local exchanges, altcoins used to dominate more than 80% of trading activity. Meanwhile, on global platforms, Bitcoin and Ether combined usually take up half or more of total trading volume.

Between November 5 and November 28, 2024, daily crypto trading in Korea averaged $9.4 billion. That was even higher than the $7 billion traded daily on the Kospi, their national stock exchange. Then everything dropped off a cliff.

Thielen’s team said the drop in Korean trading is one of the biggest reasons altcoins are crashing right now. Less appetite means fewer buys, which means lower prices. That change in behavior has now become the new normal.

Traders are moving out of risky tokens and into companies tied to crypto infrastructure, the ones that actually hold Bitcoin. That’s not a short-term trend, either. Thielen called it a “structural shift,” the kind that doesn’t reverse overnight.

Altcoins fall harder during latest market dump

This past month’s crypto selloff didn’t help either. As US–China trade tensions escalated, crypto got caught in the crossfire. $380 billion was flushed from the space. Out of that, $131 billion came directly from altcoins. Once again, they took the worst hit.

Even though altcoins trade less volume than Bitcoin or Ether, they had grown to make up a huge chunk of the market. But traders aren’t sticking around for the rebounds anymore. They’re rotating out.

“The problem with altcoins is, yes, they can go up more,” said Morten Christensen, a crypto trader and the guy behind AirdropAlert.com. “But they can go -50% in a day or -90% in a week. I am not going to play that game with my portfolio late in the cycle when the odds keep increasing that the end is here.”

Bitcoin dominance used to crash just before major industry meltdowns. Back in 2019, it was up at 70%, but by late 2022, it dropped to 38%, right before everything fell apart. Now, despite this correction, it still holds 58.5% of the total market, down from 65% in July, but still strong. That tells you where the money’s going.

As for altcoins, they’re becoming untradeable for anyone who isn’t willing to hold lottery tickets. “These assets in particular have been subject to a considerable amount of risk, as we saw this weekend,” said John Todaro, an analyst at Needham & Co. “Yet they have been broadly underperforming large-cap crypto assets, equities and gold. In short, taking on significantly more risk for what has been less reward.”