Why isn't altcoin season returning... the markets that siphoned off its funds

▲ Cryptocurrency ©

An analysis has emerged suggesting that Real World Assets (RWA), prediction markets, and memecoins have taken over the space where altcoin season once thrived. Although Bitcoin (BTC) set new all-time highs in the last cycle, profits did not largely flow into altcoins as they did in the past. Instead, investors moved to new on-chain investment opportunities such as tokenized stocks, bonds, commodities, and prediction markets, weakening the structural funding channels into the altcoin market.

According to investment media FXStreet on September 18 (local time), while the global cryptocurrency market capitalization decreased by over 50% from October 2025 to June of this year, the altcoin market capitalization plummeted from $1.49 trillion to $543 billion. Unlike Bitcoin's market capitalization, which increased by approximately 90% based on cycle peaks between 2021 and 2025, altcoin market capitalization actually decreased by 6% from $1.59 trillion four years ago. Bitcoin dominance also did not sharply decline as it did in the 2017 and 2021 cycles, maintaining the 50-60% range in this cycle.

The media's analysis suggests that the market structure itself has changed. In 2017, Initial Coin Offerings (ICOs), and in 2020-2021, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Layer 1 (L1) competition attracted new funds into altcoins. In contrast, in this cycle, while spot crypto ETFs, tokenization, and memecoin launchpads expanded the market, funds were not concentrated in altcoins. Bitcoin spot ETFs had net assets of $150.77 billion by October 2025, and Ethereum (ETH) spot ETFs reached $28.58 billion by August 2025. XRP (Ripple) and Solana (SOL) spot ETFs also attracted approximately $1.58 billion and $1.46 billion, respectively, but the net assets of products related to BNB, Avalanche (AVAX), Dogecoin (DOGE), Polkadot (DOT), and Litecoin (LTC) barely exceeded $20 million each.

In particular, the explosive growth of the Real World Asset (RWA) market is analyzed to have absorbed funds that would otherwise have gone to altcoins. On-chain RWA Assets Under Management (AUM) have grown approximately eightfold since January 2025, reaching $34.092 billion, and open interest in RWA perpetual futures has surged from under $100 million to $15.903 billion. The trading volume for related perpetual futures exploded from under $1 billion in August last year to $948.234 billion in August this year. During the same period, altcoin market capitalization fell from $1.49 trillion in October 2025 to $540 billion in June of this year, only to recover slightly above $800 billion in August.

In this process, Hyperliquid (HYPE) emerged as a prime beneficiary. As investors expanded their on-chain exposure to traditional financial assets such as gold, crude oil, stocks, and private equity, Hyperliquid recorded over $429 million in protocol revenue since January. The price of HYPE also quadrupled during the same period, reaching an all-time high of $89.60, and its market capitalization expanded to $17.9 billion. Centralized exchanges have also entered the RWA market, currently accounting for 64% of related open interest and 87% of trading volume. The media analyzed that while the growth of tokenization and the RWA market expanded the cryptocurrency market itself, it diverted interest and liquidity away from traditional altcoins.

Prediction markets and memecoins were also identified as other competitors that have siphoned off altcoin funds. This year's prediction market trading volume reached $120.23 billion, and its share relative to spot cryptocurrency trading volume rose to approximately 8% in July. Furthermore, memecoin launchpads on Solana, Base, BNB Smart Chain, and Robinhood Chain have dispersed liquidity across millions of tokens. FXStreet predicts that in the long term, major Layer 1s and application tokens supporting tokenization and RWA perpetual futures may benefit, but for the traditional altcoin market to re-enter a strong upward cycle, new structural drivers like past ICOs or DeFi may be necessary.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*