Analysts Throw Cold Water on Altcoin Rally Hopes—’Dead Money’ Until Macro Winds Shift

Altcoin bulls, brace for impact. Market watchers see zero near-term catalysts to break the crypto winter’s chokehold on Ethereum challengers and meme coins alike.

Why the gloom? Institutional flows keep funneling into Bitcoin ETFs while regulators treat altcoins like piñatas—just ask the SEC’s enforcement division. Even ’fundamentals’ like smart contract upgrades get drowned out by Treasury yield spikes.

One hedge fund PM quipped: ’Trading alts now is like buying NFTs of a burning dumpster. You might get a dead-cat bounce, but Wall Street’s algos will front-run retail every time.’ Ouch.

 Experts have long predicted that this could be a good year for the altcoin market.  Traditionally, such years happen on a relatively regular schedule, and the conditions for one are met on paper.  However, now, when no such upswing has manifested, many feel that it won’t happen at all.

In this article, we’ll go over the arguments for why altcoins won’t have an upswing any time soon and what investors should do to make use of altcoins as a part of a larger portfolio.

The Timing

Altcoin rallies happened on a timetable that is easy to predict and follow.  Such rallies happened in 2017 and 2021, both of which are connected to the Bitcoin halving.  The rise started 320 days after the halving in both cases.  This year, the rise should have started on March 5th, 2025.

However, more than a month has passed since the set time, and altcoins aren’t acting according to the predictions, meaning that they probably won’t at all.  The overall market forces that are driving down crypto prices are more important than the halving.

Liquidity Drives the Price

The so-called alt season is mostly driven by liquidity.  This means that it happens because altcoins are abundant.  Monetary policy set by governments and central banks can, therefore, affect the price of altcoins by driving up their liquidity.  This was the case the last time altcoins were on the rise.

There’s a simple explanation for this: when there’s access to capital, meaning that the interest rates are down, investors tend to be less risk-averse.  This is especially true for speculative assets, such as smaller altcoins that are bought and sold in quick succession.  There’s a demand for altcoins as they are widely used on the market for everything from crypto casinos to asset preservation, but demand is still mostly driven by interest rates.

Investor Risk Exposure

US investors have started fleeing the assets that expose them to risk as a part of an overall change to the investment approach.  Small-time investors will also stop investing altogether and pull off their assets in a time of need.

Big-time investors are known to buy the dip, and that may be their initial reaction to lower prices in the altcoin market.  However, if the altcoin doesn’t manifest in the way that was planned, big-time investors will give up on the speculation as well, just a bit later than others.

Tariffs

The biggest issue causing the economic instability and therefore affecting every market, including the altcoin one, are the tariffs the US and China have imposed on each other.  Ten percent tariffs issued on goods from most foreign countries have also affected the US market.

These will affect everyone buying foreign goods and therefore leave less capital for investing and long-term planning.  Those who use foreign equipment to mine crypto coins may also feel an immediate effect, as that equipment may become more expensive.

Stablecoins

The only altcoins that are doing fine and as expected are stablecoins.  The market cap on the two leading stablecoins – Tether and USDC – have had substantial growth for the past eight months.  This suggests that there’s still capital going into the crypto market even amid the uncertainty.

Some crypto investors don’t add stablecoins to their portfolios, as they are tied to the worth of fiat money.  For those who use cryptos to get away from the traditional markets, stablecoins defeat the purpose.  However, the user base is growing. 

What to Do

Even though the altcoins aren’t performing as planned, investors don’t need to change their policy much.  For most altcoins, buying and holding is the simplest way to earn money if the investor is able to wait out the slow turn.  It’s also important to diversify among different crypto coins to mitigate the risks involved.

A good portfolio is a mixture of altcoins used in different industries and based on different blockchains.  Some also include a variety of stablecoins, as they are often used to make the portfolio less risky.  At the same time, the altcoins that have proven to stall for longer than this particular crisis may need to get dropped from the portfolio.

To Sum Up

Altcoins didn’t grow in value as they did after the bitcoin halving.  Many have predicted that 2025 will be a great year for altcoins because of how they behaved in the past, but it seems that it won’t happen.  There are many reasons why this is the case.

Even though altcoins aren’t making as much of a splash, they are still widely used in many industries, and the best way for investors to use them is to hold on to their assets and wait for the markets to change.  The tariffs and monetary policies that have caused the downturn will change eventually.