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The Crypto Matthew Effect: As market cap is increasingly dominated by mainstream coins, is there still a chance for altcoins?
Original Title: Capital Concentration in an Expanding Crypto Universe
Original Author: Tanay Ved, coinmetrics
Original Translator: Luffy, Foresight News
TL;DR
The crypto investment landscape continues to expand, but capital is increasingly concentrated in a narrowing range of assets: Bitcoin's market dominance is on the rise, while the growth of stablecoins and on-chain derivatives is squeezing the market space for altcoins. The altcoin market is shrinking, with a significant increase in top-heavy concentration: the top ten altcoins by market cap now represent around 82% of the sector's total market cap, a significant increase from 70% five years ago. Since 2023, large-cap crypto assets have significantly outperformed mid-cap and small-cap coins; fund flows in the market post-volatility have further strengthened investor preferences for high liquidity and established flagship assets.
The crypto investment landscape is still expanding. Hundreds of new tokens are launched every year, the universe of stocks focused on digital assets is growing, and tokenization technology is gradually bringing traditional assets such as stocks and commodities onto the blockchain. As investment choices become more varied, market capital is becoming more discriminating.
Bitcoin's market dominance has risen to around 65%, reaching its highest level since early 2021; at the same time, stablecoins and on-chain derivatives (such as wrapped tokens, staking tokens, cross-chain bridge tokens, etc.) account for nearly 12.5% of the total crypto market cap. Therefore, altcoins are facing a dual squeeze, as their total market share is shrinking despite the increasing number of tokens.
This issue of the "Network Market Overview" report will explore whether the crypto market is undergoing a structural shift towards capital concentration. We will analyze the trends in market dominance and performance for assets in different market cap brackets and different sectors to investigate whether capital is continuing to concentrate on a smaller number of tokens that are larger in scale and more mature in development, or if investment opportunities are still widely distributed?
Evolution of Market Dominance
First, let's start with an analysis of market dominance. Bitcoin's market dominance (i.e., Bitcoin's market cap as a percentage of the total crypto market cap) has climbed to 65% in 2025, hitting a new high since 2021. It is worth noting that this growth is not a short-term spike but rather a long-term steady upward trend since hitting a low point in 2022.
The launch of a Bitcoin spot ETF has deepened the institutionalization process, attracting over $150 billion of long-term capital and further boosting its market dominance. This trend has solidified Bitcoin's position as a "safe haven asset" in the crypto market, making it a high-liquidity, standardized entry point for traditional institutional investors into the crypto market. Compared to the previous rounds of altseasons during bull markets, which rapidly diluted Bitcoin's market dominance, Bitcoin's dominance in this round is more enduring.
Bitcoin Dominance, Data Source: Coin Metrics
The structure of other assets in the crypto market is also undergoing a transformation. Stablecoins with a market capitalization of over $300 billion and the increasing share of on-chain derivatives in the total market cap are reshaping the market. These tokens serve different functions in the crypto ecosystem: stablecoins are the primary trading medium in the market, while on-chain derivatives provide investors with the right to claim underlying asset returns or create yield-generating channels.
Crypto Market Dominance Distribution, Data Source: Coin Metrics
As a result, the altcoin market is facing a dilemma. The range of investable assets is narrowing, and the concentration of top projects is becoming more evident: market value continues to flow towards assets with higher liquidity and more mature development. These assets often have clear use cases, a defined regulatory development path, and can fully benefit from the development trends of stablecoins, decentralized finance (DeFi), and asset tokenization.
In contrast to previous market cycles, this round has seen a significant slowdown in capital rotation from mainstream coins to altcoins, with ETFs and various institutional investment tools firmly locking market liquidity in top assets. However, with the implementation of universal listing standards, the launch of altcoin and multi-asset ETFs to broaden investment channels for more large-cap altcoins, and the advancement of market structure-related legislation, this market landscape may undergo a transformation.
The "Giant Monopoly" Trend in the Altcoin Sector
Even within the altcoin sector, the trend of capital concentration is intensifying. The top ten altcoins by market cap (excluding Bitcoin) now account for approximately 82% of the sector's total market cap, a significant increase from 64% during the 2021 bull market. In the previous bull market, many small-cap altcoins that briefly created value gradually exited the market, replaced by a more top-heavy sector structure with shorter lifecycles for various short-term market narratives, making it difficult to sustain asset value growth.
Top 10 Altcoins Market Cap Share, Data Source: Coin Metrics
We can also observe this centralization trend by looking at the number of tokens that have surpassed a specific market cap threshold. Despite the total market cap of the crypto market hitting new all-time highs, the number of altcoins with a market cap exceeding $1 billion has decreased from around 105 at the peak in 2021 to approximately 58 currently. This means that even though the overall asset quantity in the market is increasing, the number of truly "investable" altcoins is decreasing. While this doesn't necessarily indicate a decline in the altcoin sector, the market's attention may further shift towards assets with solid fundamentals and higher risk resilience.
Number of Altcoins with Market Cap over $1 Billion, Data Source: Coin Metrics
The table below summarizes the annual evolution characteristics of the market trends mentioned above. Some metrics still exhibit cyclical patterns, such as Bitcoin's market dominance decreasing during bull markets and increasing during bear markets, but the market share of the top ten altcoins has followed a different trend: from 2020 to 2024, regardless of the market conditions, this ratio consistently stayed between 69% and 73%, but in 2025, it surged significantly to 82%. This change indicates a structural shift in the market towards mature flagship assets, rather than just a short-term "chasing quality assets for price appreciation" behavior.
Data Source: Coin Metrics
Capital Flow to Mainstream Coins
This trend of capital concentration is also reflected in asset performance. Since 2023, mid-cap coins (market cap $1 billion - $10 billion), especially small-cap coins (market cap below $1 billion), outperformed large-cap coins (market cap over $100 billion) in the early and late stages of 2024. However, this trend saw a sharp reversal in 2025 due to the rapid waning of market sentiment towards meme coins and other short-term narrative rotations.
On an equally weighted basis, from January 2023 to the present, the overall return of large-cap crypto coins is approximately 365%, while mid-cap and small-cap coins have only seen returns of about 70% and 55%, respectively. Most of the earlier gains have been given up. This phenomenon of return divergence clearly indicates that the market's performance is increasingly favoring developed, liquid assets, making it challenging for small-cap tokens to replicate the sustainability seen in previous cycles.
Market Performance of Tokens of Different Market Capitalization Tiers, Data Source: Coin Metrics
On October 10, 2025, the market experienced a large-scale liquidation event due to high leverage positions and liquidity exhaustion. This event may further strengthen the trend of capital inflow into defensive assets, with investors increasingly favoring high liquidity assets rather than small-cap assets with significantly higher volatility.
Conclusion
Various data indicate that the crypto market is undergoing a structural shift, gradually maturing, and moving towards consolidation. Despite the continuous growth in the number of crypto market assets and the increasing richness of traditional asset types supported as underlying infrastructure, the overall liquidity of the market remains limited. Meanwhile, in a multi-asset investment portfolio, crypto assets still need to compete with popular investment themes in the stock market, gold, and other traditional safe-haven assets.
Currently, capital is increasingly flowing into large-cap crypto assets, as well as the infrastructure track supporting stablecoins, tokenized assets, and the development of decentralized finance. The importance of liquidity and scale has been further heightened, raising the barrier for small-cap coins to attract long-term capital.
Of course, if market structure-related rules become clearer, and small-cap coins and multi-asset ETFs continue to proliferate, coupled with an improvement in market liquidity conditions, it is still possible to trigger a new altcoin season. However, it is foreseeable that the beneficiaries of this altcoin season will be more concentrated, and capital allocation will be more discerning than in any previous cycle.
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BeatSwap, a global Web3 Intellectual Property (IP) infrastructure project, is attempting to overcome the current fragmentation limitations of the Web3 ecosystem, building a full-stack system that covers the entire lifecycle of IP rights.
Currently, most Web3 projects are still in the stage of functional fragmentation, often focusing only on a single aspect, such as IP asset tokenization, transaction functionality, or a simple incentive model. This structural dispersion has become a key bottleneck hindering the industry's scale application.
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· Authorization-based revenue sharing mechanism
· User-engagement-driven incentive system
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BeatSwap is not limited to existing crypto users but is attempting to take the global music industry as a starting point, actively creating new market demand. Its core strategies include:
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Igniting IP-centric content consumption demand
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In this context, BeatSwap positions itself at the intersection of "real-world content demand" and "on-chain infrastructure," attempting to bridge the structural gap between content production and financial flow.
BeatSwap's upcoming core product "Space" is scheduled to launch in the second quarter of 2026. This product is defined as the SocialFi layer in the ecosystem, aiming to directly connect creators with users and achieve deep integration with other platform modules.
Key designs include:
A fan-centric interactive mechanism
Exposure and distribution logic based on $BTX staking
User paths connected to DeFi and liquidity structures
Thus, a complete user behavior loop is formed within the platform: Discovery → Participation → Consumption → Rewards → Trading
$BTX is designed to be a core utility asset within the ecosystem, rather than just a simple incentive token, with its value directly tied to platform activity and IP use cases.
Main features include:
· Yield distribution based on on-chain authorized actions
· Value reflection based on IP usage and user engagement dynamics
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· Value growth driven by ecosystem expansion
With the increased frequency of IP use, the utility and value support of $BTX will enhance simultaneously, helping alleviate the "disconnect between value and utility" issue present in traditional Web3 token models to some extent.
Currently, $BTX has been listed on several mainstream exchanges, including:
Binance Alpha
Gate
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OKX Boost
As the launch of "Space" approaches, BeatSwap is actively pursuing more exchange listings to further enhance liquidity and global accessibility, laying a foundation for future market expansion.
BeatSwap's goal is no longer limited to the traditional Web3 narrative but aims to target over 2 billion digital music users and a trillion KRW-scale content market.
By integrating content creators, users, capital, and liquidity into a blockchain framework centered around IP rights, BeatSwap is striving to build a next-generation infrastructure focused on "IP tokenization."
BeatSwap integrates IP authentication, authorization distribution, incentive mechanism, transaction system, and market construction to establish a unified structure that bridges the full lifecycle path of IP rights.
With the launch of the Q2 2026 "Space," the project is expected to become a key infrastructure connecting content and finance in the IP-RWA (Real World Assets) track.
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BeatSwap is evolving towards a full-stack Web3 infrastructure, covering the entire lifecycle of IP rights.
BeatSwap, a global Web3 Intellectual Property (IP) infrastructure project, is attempting to overcome the current fragmentation limitations of the Web3 ecosystem, building a full-stack system that covers the entire lifecycle of IP rights.
Currently, most Web3 projects are still in the stage of functional fragmentation, often focusing only on a single aspect, such as IP asset tokenization, transaction functionality, or a simple incentive model. This structural dispersion has become a key bottleneck hindering the industry's scale application.
BeatSwap's approach is more integrated, integrating multiple core modules into the same system, including:
· IP authentication and on-chain registration
· Authorization-based revenue sharing mechanism
· User-engagement-driven incentive system
· Transaction and liquidity infrastructure
Through the above integration, the platform builds an end-to-end closed-loop path, allowing IP rights to complete a full cycle of "creation, use, and monetization" within the same ecosystem.
BeatSwap is not limited to existing crypto users but is attempting to take the global music industry as a starting point, actively creating new market demand. Its core strategies include:
Exploring and incubating music creators (Artist discovery)
Building a fan community
Igniting IP-centric content consumption demand
The current global music industry is valued at around $260 billion, with over 2 billion digital music users. This means that the potential market corresponding to the tokenization and financialization of IP far exceeds the traditional crypto user base.
In this context, BeatSwap positions itself at the intersection of "real-world content demand" and "on-chain infrastructure," attempting to bridge the structural gap between content production and financial flow.
BeatSwap's upcoming core product "Space" is scheduled to launch in the second quarter of 2026. This product is defined as the SocialFi layer in the ecosystem, aiming to directly connect creators with users and achieve deep integration with other platform modules.
Key designs include:
A fan-centric interactive mechanism
Exposure and distribution logic based on $BTX staking
User paths connected to DeFi and liquidity structures
Thus, a complete user behavior loop is formed within the platform: Discovery → Participation → Consumption → Rewards → Trading
$BTX is designed to be a core utility asset within the ecosystem, rather than just a simple incentive token, with its value directly tied to platform activity and IP use cases.
Main features include:
· Yield distribution based on on-chain authorized actions
· Value reflection based on IP usage and user engagement dynamics
· Support for staking and DeFi participation mechanisms
· Value growth driven by ecosystem expansion
With the increased frequency of IP use, the utility and value support of $BTX will enhance simultaneously, helping alleviate the "disconnect between value and utility" issue present in traditional Web3 token models to some extent.
Currently, $BTX has been listed on several mainstream exchanges, including:
Binance Alpha
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MEXC
OKX Boost
As the launch of "Space" approaches, BeatSwap is actively pursuing more exchange listings to further enhance liquidity and global accessibility, laying a foundation for future market expansion.
BeatSwap's goal is no longer limited to the traditional Web3 narrative but aims to target over 2 billion digital music users and a trillion KRW-scale content market.
By integrating content creators, users, capital, and liquidity into a blockchain framework centered around IP rights, BeatSwap is striving to build a next-generation infrastructure focused on "IP tokenization."
BeatSwap integrates IP authentication, authorization distribution, incentive mechanism, transaction system, and market construction to establish a unified structure that bridges the full lifecycle path of IP rights.
With the launch of the Q2 2026 "Space," the project is expected to become a key infrastructure connecting content and finance in the IP-RWA (Real World Assets) track.
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