Altcoins Make Up 40% of Crypto Market, Behave Like Startups

Alternative cryptocurrencies, known as altcoins, accounted for more than 40% of total crypto market capitalization as of September 2025, a CoinShares report found. The report compares many altcoin projects to early-stage technology startups.

CoinShares describes typical altcoin projects as launched by small teams that raise early funding, develop software and try to attract users and developers. The report links token success to developer activity, partnerships and user adoption, and notes that many projects do not reach those milestones. Data cited in the report shows more than 17,000 “dead coins” cataloged by Blockspot.io as of April 2026. The report also documents frauds such as rug pulls that have cost investors billions.

Price swings in the altcoin market can be large. The report states moves of 30% to 50% over a few days are not unusual, driven by thin trading volumes and concentrated token ownership. Without traditional anchors like earnings reports or dividends, altcoin valuations can move quickly with sentiment and short-term flows.

The report describes recurring market cycles, including so-called “altseason,” when capital rotates out of bitcoin and into alternative tokens after bitcoin has settled into a new price range. Different cycles have favored different themes, with past runs led by decentralized finance projects, artificial-intelligence-focused tokens and cross-chain technologies. Tokens aligned with the prevailing theme typically attract the most investment.

Broader economic and policy factors also affect altcoin performance. CoinShares identifies interest rate levels, regulatory developments and overall investor risk appetite as determinants of institutional flows into altcoins. Historical patterns cited in the report show altcoins often fall first when conditions tighten and recover earlier when conditions improve.

For individual project evaluation, the report highlights indicators of activity such as growth in active users, rising transaction volumes and visible developer contributions. It also warns that token supply schedules matter; large allocations reserved for founders or early backers can create future selling pressure unrelated to technical progress.

Given these characteristics, CoinShares recommends sizing altcoin exposure as a small, venture-capital-style stake within a diversified portfolio rather than as a core position. The report points to the CoinShares Altcoins ETF (DIME) as a regulated, equally weighted option providing access to Layer 1 altcoin products across U.S., Canadian, U.K. and European markets.

The report notes that the larger share of altcoins in overall market capitalization expands the sector’s scale while many tokens retain start-up features that can lead to abrupt failures.