Altcoin market capitalization (TOTAL2) remained below $1 trillion in February, with market sentiment falling to its most extreme levels in years. Many investors expect altcoins to bottom soon after five straight months of declines.
There may still be an opportunity in the first quarter of 2026. But investors need objective signals to evaluate the broader picture.
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Continued selling pressure and fragmented liquidity burden on altcoins
Selling pressure on altcoins (excluding BTC and ETH) has reached its most extreme levels in five years, according to a report from CryptoQuant.
Over the past 13 months, cumulative buy/sell delta data has reached -$209 billion. By January 2025, this delta was close to zero, reflecting the balance of supply and demand. Afterwards, the downward trend continued without any significant reversal.
This extreme situation is completely different from the 2022 bear market. In 2022-2023, selling pressure could slow down and the market could enter a sideways phase before recovering. This slowdown has not occurred in the current cycle.
“This is not a decline. It is the 13th consecutive month of net selling in CEX spot. -209B does not mean bottom. It means buyers are gone,” said an IT Tech analyst.
Derivatives data can also provide additional short-term insights. Traders currently have significantly more long positions in Bitcoin than in altcoins, as reflected in Alphractal’s Long/Short Ratio data.
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The chart shows that this is the first time in history that Bitcoin’s buy ratio has remained above the altcoin average for four consecutive months. This means that short-term traders have reduced their exposure to altcoins and expectations of altcoin volatility have weakened.
Moreover, the overall altcoin market capitalization has fallen to less than $1 trillion, the level it was five years ago. OverDose, an altcoin analysis account, pointed out that the biggest difference lies in the number of tokens. Even five years ago, there were only about 430,000 listed coins. Now that figure has jumped to 31.8 million, an increase of nearly 70-fold.
Too many tokens are competing for a piece of the market “pie” that hasn’t gotten any bigger. These dynamics make recovery more vulnerable and threaten 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-shoulder pattern, with the capitals moving towards the neckline support. Analyst Pentoshi said even if altcoins rebound, the gains will not be significant.
“Even if stocks bounce back from here, it won’t be significant. I think they will end up hitting new lows. It will still take some time to resolve,” predicted analyst Pentoshi.
According to CoinGecko research, 53.2% of all cryptocurrencies listed on GeckoTerminal have failed by the end of 2025. In 2025 alone, 11.6 million tokens were destroyed.
The current bear market could permanently change the way investors allocate capital within the altcoin sector. Market participants can become more selective, prioritize liquidity and fundamentals, and reduce exposure to speculative low-capital assets.