The performance of cryptocurrencies and stocks since January 2024 suggests that the new “altcoin trading” is just stock trading.
The S&P 500 returned approximately 25% in 2024 and 17.5% in 2025, with a two-year compound return of approximately 47%. The Nasdaq-100 returned 25.9% and 18.1% during the same period, for a cumulative gain of nearly 49%.
The CoinDesk 80 Index, which tracks the next 80 crypto assets after the top 20, fell 46.4% in the first quarter of 2025 alone and fell about 38% year-to-date as of mid-July.
The MarketVector Digital Assets 100 Small-Cap Index fell to its lowest level since November 2020 at the end of 2025, wiping more than $1 trillion off the total crypto market capitalization.
The divergence is not a rounding error. Broad baskets of altcoins generated negative returns with volatility equal to or greater than stocks, while US stock indices posted double-digit gains with controlled declines.
The question for Bitcoin investors is whether diversifying into smaller crypto assets offered any risk-adjusted benefits, or simply added exposure to a negative Sharpe ratio while maintaining a stock-like correlation.
Choosing a Credible Altcoin Index
For the analysis, CryptoSlate tracked three altcoin indices.
The first is the CoinDesk 80 index, launched in January 2025, which tracks the next 80 assets after the CoinDesk 20, providing a diversified basket beyond Bitcoin, Ethereum and the biggest names.
The second is the MarketVector Digital Assets 100 Small-Cap Index, which captures the 50 smallest tokens in a basket of 100 assets and serves as a barometer of the “junk end of the market.”
The Kaiko Small Cap Index, a research product rather than a tradable benchmark, offers a clear sell-side quantitative lens on the smaller asset cohort.
Together, these three provide a spectrum: a broad alternative basket, high-beta microcaps, and a quantitative research perspective. All three tell the same story.
On the other hand, the equity baseline is simple.
US large cap indices reached levels of around 20 in 2024 and 10 in 2025, with relatively shallow declines. The S&P 500’s worst intra-year decline in the period remained in the mid-teens, while the Nasdaq-100 remained in a strong uptrend.
Both indices increased returns year over year without returning significant gains.
Broad altcoin indices followed a different path. The CoinDesk Indices report showed that CoinDesk 80 returned -46.4% in the first quarter alone, while the large-cap CoinDesk 20 fell “only” -23.2%.
As of mid-July 2025, CoinDesk 80 is down about 38% year-to-date, while CoinDesk 5, which tracks Bitcoin, Ethereum, and three other majors, has gained between 12% and 13% over the same period.
CoinDesk Indices’ Andrew Baehr described the dynamic to ETF.com as “identical correlation, completely different losses and gains.”
CoinDesk 5 and CoinDesk 80 showed a correlation of 0.9, meaning they moved in the same direction, but one made low double-digit gains while the other lost almost 40%.
The diversification benefit of having smaller alternatives was negligible, while the performance penalty was severe.
The small cap segment fared worse. Bloomberg’s coverage of the MarketVector Digital Assets 100 Small-Cap Index noted that by November 2025, the index had fallen to its lowest level since November 2020.
Over the past five years, the small-cap index returned approximately -8%, versus approximately +380% for its large-cap counterpart. Institutional flows rewarded size and punished tail risk.
When measuring altcoin performance in 2024, Kaiko’s small-cap cohort is down more than 30% over the year, while mid-caps struggled to keep pace with Bitcoin.
The winners were concentrated in a small set of big names, such as Solana and XRP. Back then, altcoin trading volume dominance against Bitcoin rose again to 2021-era highs, but 64% of altcoin volume was concentrated in the top 10 altcoins.
Liquidity did not disappear from cryptocurrencies, but rather moved up the quality curve.
Sharpe ratios and reductions
Risk-adjusted returns tilt the comparison even further. The CoinDesk 80 and alternative small-cap indices generated deeply negative returns with equity-like or higher volatility.
CoinDesk 80’s -46.4% occurred in a single quarter. MarketVector’s small-cap gauge hit pandemic-era lows in November after another decline.
Broad alternative indices experienced multiple peak-to-trough moves exceeding 50% at the index level: Kaiko’s -30%+ for small caps in 2024, CoinDesk 80’s -46% in Q1 2025, and small cap indices hitting 2020 lows again in late 2025.
By contrast, the S&P 500 and Nasdaq-100 posted consecutive total returns of 25%/17%, with declines of around 15% at worst. US stocks were volatile but controlled. Crypto indices were volatile and destructive.
Even allowing for higher volatility for altcoins as a structural characteristic, their returns per unit of risk in 2024 and 2025 were poor compared to holding US stock indices.
Alternative broad indices posted negative Sharpe ratios during the 2024 and 2025 window, while the S&P and Nasdaq posted strongly positive Sharpe ratios before adjusting for increased volatility in cryptocurrencies. After adjustment, the gap widened further.
| Index/asset | Universe | 2025 profile (through the third and fourth quarters) |
|---|---|---|
| S&P 500TR | Great American Stocks | +17.5% by 2025, in addition to +25% in 2024, with modest corrections. |
| Nasdaq-100 TR | Growth of US megacaps | +18.1% in 2025 after +25.9% in 2024; two-year capitalization close to +50%. |
| CoinDesk 80 (CD80) | Alternative wide basket ex top 20 | –46.4% in the first quarter of 2025; around -38% YTD as of mid-July. |
| MarketVector DA 100 small cap | 50 smaller ones in a basket of 100 assets | New four-year low in November 2025, underperforming the largest-cap index since early 2024. |
Bitcoin Investors and Crypto Liquidity
Liquidity concentration and quality migration constitute the first implication. Bloomberg and Whalebook’s coverage of the MarketVector Small Cap Index emphasized that since early 2024, smaller alternatives have consistently lagged behind, with institutional flows funneled into Bitcoin and Ethereum exchange-traded products.
Combined with Kaiko’s observation that altcoin volume dominance returned to 2021 levels but was concentrated in the top 10 altcoins, the pattern is clear: liquidity moved up the quality curve rather than exiting cryptocurrencies entirely.
The “alternate season” functioned as a basic operation, not a structural overperformance. CryptoRank’s altseason index rose to about 88 in December 2024, then fell again to 16 in April 2025, a complete round trip.
The 2024 alts season was a classic bust, but by mid-2025, broad baskets had given back most of their gains, while the S&P and Nasdaq worsened.
For advisors and allocators considering diversifying beyond Bitcoin and Ethereum, CoinDesk’s data provides a clear case study.
A concentrated large-cap crypto index (CoinDesk 5) gained a year-to-date low in mid-2025, while the alternative diversified index (CoinDesk 80) lost almost 40%. However, the two indices showed a correlation of 0.9.
Investors did not gain significant diversification benefits from accumulating smaller alternative assets. They accepted much worse returns and declines than Bitcoin/Ethereum or US stocks, while maintaining directional exposure to the same macroeconomic factors.
Capital is treating most alternatives as tactical operations rather than structural assignments. Bitcoin and Ethereum spot ETFs offered a significantly better risk-adjusted path through 2024 and 2025, as did US stocks.
Altcoin liquidity is consolidating in a small group of “institutional grade” names, such as Solana and XRP, and a handful of others that have demonstrated independent catalysts or regulatory clarity. The breadth of the index is being punished.
What does it mean for liquidity in the next cycle?
The 2024 and 2025 periods tested whether altcoins could offer diversification value or outperformance in a risky macro environment. U.S. stocks posted consecutive years of double-digit gains with manageable declines.
Bitcoin and Ethereum gained institutional acceptance through spot ETFs and benefited from reduced regulatory escalation.
Broad altcoin indices lost money, suffered deeper declines, and remained highly correlated with cryptocurrencies and large-cap stocks without offering compensation for the additional risk.
Institutional flows followed performance. The MarketVector Small Cap Index’s -8% five-year return versus the Large Cap Index’s +380% gain reflects the migration of capital to assets with regulatory clarity, liquid derivatives markets and custody infrastructure.
The CoinDesk 80’s -46% for Q1 and subsequent -38% year-to-date as of mid-July suggest the migration has accelerated rather than reversed.
For BTC/ETH investors evaluating whether to diversify into smaller cryptoassets, the 2024/25 data provides a clear answer: broad alt baskets underperformed US stocks in absolute terms, underperformed Bitcoin and Ethereum in risk-adjusted terms, and failed to deliver diversification benefits despite maintaining a correlation close to 0.9 with large-cap cryptocurrencies.