On March 4th, on-chain data shows that the current crypto market is experiencing a clear divergence. The latest report from blockchain data platform CryptoQuant indicates that about 38% of altcoins are trading near their all-time lows, a level that even surpasses the extreme market volatility seen after the FTX collapse. Analyst Darkfost pointed out that this indicator reflects that, despite the relative stability of mainstream assets, many small and medium-sized tokens continue to face ongoing selling pressure.
Data shows that in this cycle, the decline and duration of altcoins have reached cyclical highs. Unlike the sharp market liquidations in 2022, there are currently no signs of large-scale forced selling. Experts believe that the current downturn in altcoins is more likely due to tightening liquidity, decreased risk appetite among investors, and a reallocation of funds into more established assets like Bitcoin and Ethereum.
Changes in market structure have further intensified this trend. As institutional funds gradually enter the digital asset space, capital is more inclined to allocate to assets with higher liquidity and market recognition. Meanwhile, some blockchain ecosystems remain highly active; for example, the Solana ecosystem continues to see growth in developer and user engagement, which further concentrates market funds into a few mainstream narrative assets.
Analysts also note that the proximity of many altcoins to their historical lows is impacting market liquidity. Some tokens show a significant decrease in order book depth, with wider trading slippage, increasing the costs of entering and exiting positions. This environment can lead to sharp intraday price swings and heighten short-term trading uncertainties.
On the regulatory front, Europe’s ongoing improvements to digital asset regulations may also reinforce market concentration. As compliance standards and disclosure requirements tighten, platforms tend to prioritize supporting more transparent and liquid crypto assets. Industry insiders believe that even if overall market sentiment improves in the future, edge-case altcoins lacking fundamental support and ecosystem backing may remain structurally disadvantaged in the long term.
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