While altcoin market capitalization (TOTAL2) remained below $1 trillion in February, market sentiment has fallen to its most extreme levels in years. Many investors expect altcoins to form a bottom soon after five consecutive months of decline.
There may still be an opportunity in the first quarter of 2026. However, investors need objective signals to evaluate the big picture.
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Sustained selling pressure and fragmented liquidity weigh on altcoins
According to a report from CryptoQuant, selling pressure on altcoins (excluding BTC and ETH) has reached its most extreme level in the past five years.
Cumulative buy/sell delta data for the past 13 months amounted to -$209 billion. In January 2025, this delta was almost zero, reflecting the balance between supply and demand. Since then, it has continued to decline without any reversal.
This extreme situation is completely different from the 2022 bear market. Selling pressure eased in 2022-2023, allowing the market to enter a sideways phase before recovering. No such slowdown is occurring in the current cycle.
“This is not a push. It’s the 13th consecutive month of net selling on CEX spot. -209 billion doesn’t mean the bottom. It means the buyers are gone,” said an IT Tech analyst.
Additionally, derivatives data provides additional short-term insights. Traders currently hold significantly more long positions in Bitcoin than altcoins, as reflected in Alphactal’s long/short ratio data.
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This chart shows that this is the first time in history that Bitcoin’s long ratio was above the altcoin average for four consecutive months. This indicates that short-term traders are reducing their exposure to altcoins and expectations for altcoin volatility are weakening.
Additionally, altcoin market capitalization has returned to levels seen five years ago, falling below $1 trillion. OverDose, an altcoin analysis account, pointed out that the biggest difference is in the number of tokens. Five years ago, there were only about 430,000 coins listed. Today, that number has jumped nearly 70 times to 31.8 million.
Too many tokens are competing for a “pie” in a market that is not growing. This dynamic makes recovery more fragile and threatens the survival of low-cap tokens.
Excluding the top 10, the remaining market capitalization is less than $200 billion. The technical structure shows a head-and-shoulders pattern, with this capitalization moving towards neckline support. Analyst Pentoshi commented that even if altcoins rebound, there is likely not to be much profit.
Analyst Pentoshi predicted, “Even if alternatives rebound here, it won’t be big. I think they will eventually make new lows. It will take some time to overcome the situation.”
According to CoinGecko research, 53.2% of all cryptocurrencies listed on Gecko Terminal failed by the end of 2025. In 2025 alone, 11.6 million tokens failed.
The current bear market may permanently reshape the way investors allocate capital within the altcoin sector. Market participants may become more selective, prioritizing liquidity and fundamentals and reducing exposure to speculative low-value assets.
