Crypto Funds Shift to Fundamental Analysis as Bitcoin Dominance and Altcoin Oversupply Challenge Performance
Crypto liquid funds are struggling to outperform Bitcoin this cycle as Bitcoin’s dominance in the market surges to 63%, up from 40-45% previously. Bitcoin’s price has risen significantly, becoming a tough benchmark for funds, especially amid an oversupply of altcoins that see weak demand. Many newly unlocked tokens from various sectors, such as L1/L2, DeFi, DePIN, AI, and memecoins, face excessive selling pressure, making it hard for liquid funds to generate strong returns. As a result, fund managers are shifting away from speculative narratives and increasingly adopting fundamental analysis, focusing on metrics relevant to each project’s business model—such as stablecoin supply and token velocity—rather than easily manipulated metrics like total value locked (TVL). Institutional participation is accelerating this trend by emphasizing longer-term cashflow potential. Industry leaders suggest that the traditional four-year Bitcoin halving cycle is losing relevance, with macroeconomic factors like global liquidity and interest rates gaining importance. The environment now rewards selectivity and strong fundamentals, implying that traders should expect greater differentiation among altcoins and more rigorous evaluations of project value going forward.
Neutral
The shift of crypto liquid funds towards fundamental analysis and the dominance of Bitcoin signal an evolving, more mature market environment, but not an immediate bullish or bearish impact on prices. While Bitcoin remains strong and altcoins face headwinds from oversupply and weak demand, the industry is transitioning toward long-term sustainability and more discerning investment strategies. This may stabilize markets and raise entry standards for new projects, but traders should be aware that previous cycle patterns, such as broad altcoin rallies during Bitcoin surges, are less likely. Market impact is thus neutral in the short term, favoring select projects with strong fundamentals over speculative altcoins.