Wintermute: Altcoin Season May Skip Most Tokens This Cycle

The report matches broader industry data. CryptoQuant CEO Ki Young Ju recently said the traditional rotation of Bitcoin profits into smaller altcoins has "basically disappeared." CryptoQuant also found that Bitcoin-denominated altcoin trading volume is sitting near its lowest level since 2021.

Wintermute added that liquidity continues to strengthen around institutionally favored assets while activity across smaller tokens keeps weakening.

Two other trends are growing. Altcoin OTC options volume has increased 3.4 times over the past six months as institutions increasingly use derivatives for hedging and yield generation rather than simply trading spot markets. The tokenized real-world asset market has grown nearly 50% to around $31 billion during H1 2026. Institutional demand remains strongest for tokenized U.S. Treasuries, money market funds, and private credit, while tokenized stocks continue attracting retail investors.

Not everyone expects a narrow altcoin cycle. Michaël van de Poppe said he expects the Ethereum ecosystem to outperform Bitcoin and believes ETH could target $2,300 if it breaks above $1,975. Daan Crypto Trades noted that the total altcoin market cap is still holding key support. Crypto Patel pointed to a bullish MACD crossover on altcoin dominance, saying similar setups previously produced 10x to 20x rallies. Javon Marks also said current market structure closely resembles previous altseason setups.

While analysts remain optimistic about a recovery, Wintermute's report indicates that this cycle could reward only a limited number of high-quality, liquid projects rather than lifting the entire altcoin market.