Research firms Kaiko Research and Blockhead Research Network have released a comprehensive analysis revealing that capital is increasingly concentrating in a limited number of robust cryptocurrencies rather than a broad-based rally in the altcoin market.
The report indicates that investors are avoiding risk and gravitating towards projects with high regulatory compliance, strong liquidity, and clear use cases. This trend has become more pronounced, especially following the U.S. elections, signifying a shift in investor sentiment.
Transaction Volume Concentrated in Few Coins
The report notes that while altcoin transaction volumes have returned to pre-FTX collapse levels, this volume is concentrated in a smaller number of cryptocurrencies. The top 10 altcoins account for 64% of the total volume, indicating a more concentrated market structure compared to previous periods. Alongside liquidity, the trust factor also influences investors’ preference for large-cap coins. Smaller and mid-cap projects struggle to attract sufficient capital, leading them to fade into the background. The analysis asserts that each new wave of altcoins now only supports a few solidly founded projects rather than the entire market.
Economic Uncertainties and Selective Investment Period
Rising interest rates and global tightening monetary policies make investors more cautious. Macroeconomic uncertainties directly impact the dynamics of the cryptocurrency market, creating a stronger tendency to avoid risky assets. This situation further sidelines lower-volume altcoins. Despite Bitcoin 
$83,771 reaching record levels, many altcoins remain behind the performance of 2021-22. However, this scenario does not apply to all altcoins. Projects with high market capitalization, based in the U.S., and with specific use cases are showing positive signals in their performance. With increasing ETF support and institutional interest, these assets may gain more prominence in the coming period. The report highlights that coins with strong fundamentals and regulatory compliance could become a new safe haven for investors.
Selective Altcoins Stand Out Instead of Widespread Rally
Investors are now acting based on selective analyses rather than overall market enthusiasm. In addition to Bitcoin, viewed as a safe haven, altcoins with high liquidity and institutional interest are gaining traction. This trend leads to a rise in smaller and specific groups of coins instead of a broad market rally. Political uncertainties, particularly the variability of policies in the U.S., directly impact capital flows. Consequently, investors are now prioritizing factors they previously overlooked. The report clearly indicates that a cautious and selective investment strategy is currently at the forefront.
