Analysts say the acute drop in altcoin prices over the past year may reflect a broader reassessment of which blockchain networks can attract long-term capital as institutional investors begin a gradual, multi-year entry into the market.
Bitcoin (BTC) aside, 2025 turned out to be a bear market for the broader cryptocurrency market. Decentralized finance (DeFi) tokens fell 67%, while cryptocurrencies tied to astute contract blockchains delivered a negative average return of 66%. According to to blockchain data provided by Jamie Coutts, chief cryptocurrency analyst at Real Vision.
Last year’s needy performance was due to “overvaluation” of leading crypto projects as institutional capital seeks to gain more exposure, Coutts wrote in X’s post on Wednesday.
“Repricing top quality (network adoption, fundamentally sound) protocols/L1 as multi-year institutional capital rollout begins,” he said.
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Coutts is the latest analyst to highlight the continued revaluation of cryptocurrencies as maturing digital asset investors seek exposure to protocol-enabled tokens with organic usage and revenue, rather than just general altcoins.
Looking at last year, Solana was the leading blockchain in terms of fees, with $585 million generated over the past year, trailing Tron with $576 million in revenue, according to the crypto platform Nansen.
According to Nicolai Sondergaard, research analyst at Nansen, institutional and gigantic investors are leaning towards the five leading cryptocurrencies.
“Solana ETFs are still seeing inflows, but the same cannot be fully said for the network. On the other hand, for ETH, it has been observed that some players have moved away from BTC,” the analyst told Cointelegraph, adding:
“Many expect that as liquidity returns, large players are preparing through accumulation, which seems accurate based on onchain and offchain data.”
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Institutions launch regulated altcoin investment vehicles despite altcoin bear market in 2025
Despite needy performance last year, gigantic financial institutions continue to introduce regulated cryptocurrency investment products, including US investment bank Morgan Stanley.
Morgan Stanley filed for three cryptocurrency ETFs on Tuesday – one linked to Bitcoin and the other to Solana – followed by news of a third ETF filing on Tuesday also linked to Ether (ETH), signaling a deeper push into cryptocurrencies from Wall Street participants.
However, industry participants shared mixed predictions for the behavior of the cryptocurrency market in 2026.
While the founder of Hong Kong-based investment firm Trend Research, Jack Yi, said he is “bullish” on cryptocurrencies in the first half of 2026, Fundstrat Global Advisors predicted a local bottom for Ether in the first quarter of the year at around $1,800, according to Cointelegraph.
However, an internal memo written by Fundstrat co-founder and managing partner Tom Lee also projected a rally by “year-end” after cryptocurrency markets found a “sustained low” in the first quarter.
Lee is also the CEO of BitMine Immersion Technologies, the largest corporate holder of Ether, with a total of $13 billion in ETH.
Still, excessive leverage from the previous year has been “removed,” restoring cryptocurrency valuations to “levels that meet institutional entry thresholds” amid increasing regulatory clarity, according to Lacie Zhang, market analyst at Bitget Wallet.
More regulated cryptocurrency ETFs and bipartisan progress on cryptocurrency legislation suggest that “2026 could mark a turning point from revaluation to sustainable accumulation anchored more in long-term institutional adoption,” a Cointelegraph analyst said.
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