Analysis and data show that the crypto market has been experiencing the most active Altcoin season since early 2025, with many Altcoins surpassing Bitcoin. But there is a paradox behind this excitement. Most retail investors are worried because their portfolios show little or no profit.
This article outlines the main reasons behind this situation.
Altcoin’s market capitalization will rise, but control will shrink
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TradingView data shows that in September, total 3 market capitalization (excluding BTC and ETH) reached a new high of over $1.1 trillion.
However, the proportion of others (excluding the top 10) has been declining since 2022, currently only 8%.
In past cycles such as 2017 and 2021, a total of 3 and so on are combined. This trend reflects capital that flows not only to large altcoins, but also to medium and low-cap capital.
Current divergence shows that capital is concentrated on stubcoins and on a handful of top 10 altcoins, including SOL, XRP, BNB, dogs, hype and links. Smaller altcoins provide much less liquidity, making it difficult for investors to return to the level they previously purchased. This creates situations where most face losses have won only a small victory.
Additionally, retail investors tend to diversify into many coins instead of adding sizes to top altcoins. This explains why many portfolios are stagnating despite wider market gatherings.
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“Sizing your position is everything. Many people hold 25-30 tokens at once. 100 times the tokens that make up only 1% of your portfolio will not significantly change your life.
Altcoin Index Surges But Investor Sentiment remains cautious
Blockchain Center’s Altcoin Season Index has reached 80 points. This shows that over 80% of the top 50 altcoins have outperformed Bitcoin in the last 90 days. This is a clear indication of the Altcoin season.
However, the Fear & Greed Index is 52, a neutral level that reflects attention and does not have a clear directional bias.
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Historical data show that the 2024 rally increased both indicators. At the time, the index for the Altcoin season rose above 75, while the Fear & Greed Index rose above 80, showing extreme greed. As capital revolved heavily on the altcoin, parallel rise reflected investors’ trust. But that’s not happening now.
The retail attention appears to be attributed to lessons learned in past cycles where FOMO and Altcoins rapidly collapsed due to massive sales. New factors such as Fed rate decisions, tax impacts, and geopolitical tensions could also contribute to hesitation.
“This is no longer a market for ‘everyone to get rich’. It’s player vs. player,” emphasized analyst Luka.
The number of Altcoins has increased ten times since 2021
The total 3 market capitalization is close to its peak in 2021, but the context has changed dramatically. CoinmarketCap reports that in 2025, more than 21 million Altcoins will be tracked, more than 100 times the approximately 20,000 coins in 2021.
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Dune Data highlights the token explosion from 2017 to 2025, with unique tokens surges, particularly on Ethereum, Solana and Base.
This creates a much more selective environment. In 2021, investors were less competitive, making it easier to make profits with fewer coins. Tens of millions of tokens have tokens spanning defi, meme coins, and ai tokens, and choosing the right one is just as difficult as finding a needle in a haystack.
“In 2021, the altcoin universe was small, with almost every coin catching a rally. Now the game has changed in 2025. There are hundreds of times more altcoins.
Most new tokens fail quickly due to low liquidity, rug pulling, or intense competition. Retail investors, who often spread capital across many small tokens, now face higher risks. This will result in either a loss or a very modest return, even if the overall market surges.
These three factors explain why the September 2025 Altcoin season feels incomplete. To overcome this, investors may need to focus on deeper research, fundamentally powerful projects, and rethink excessive diversification.
