The broader consensus is that the crypto market may experience another leg lower in 2026, before a firmer and stronger rebound, mirroring past cyclical patterns.
And with most altcoins already down 70%-90% from the late 2024 peak, such an outcome could decimate the segment.
According to Ki Young Ju, CEO of CryptoQuant, the only tokens that can survive such a rout are those with new liquidity via digital asset treasuries (DATs) or ETFs.
He added,
“Altcoin liquidity is drying up. If your altcoin is not playing the liquidity game, its long-term risk is likely high.”
Source: X
The chart Young Ju shared showed top crypto assets with DATs and ETFs or higher chances of one. But most market watchers are divided on whether DATs can survive deeper sell-offs.
Assessing DATs impact
Critics have argued that some DATs are vehicles used by VCs to hedge their altcoin positions and could easily dump if the market dumps even harder.
While the debate has been rife for a while, limited data has shown that DATs can quickly sell to protect mNAVs (market-to-net-asset-value), or their stock valuation relative to crypto holdings.
SharpLink, for example, dumped millions of dollars worth of its ETH holdings to buy back its shares to boost its mNAV.
A similar fear is hanging over Strategy, the largest public company holding BTC amid depressed mNAV.
And the ETF front isn’t fully on the bidding side alone. In November, U.S spot BTC ETFs saw $3.5 billion in outflows, further capping the asset’s recovery.
Put differently, while DATs and ETFs can be a crucial demand line, they can also be the source of selling pressure, especially during a broader rout.
Altcoins performance
Source: Select altcoin performance (TradingView)
But performance will vary across the board. For example, on a year-to-date (YTD) basis, Solana [SOL] has declined by 32%, while Ethereum [ETH] has dropped by only 16%. Both have DATs and ETFs.
On the other hand, Cardano [ADA] dipped by nearly 60% but Bitcoin Cash [BCH] was up 16% over the same period. Both asset have neither DATs nor ETFs.
That said, the Q4 crypto rout has wiped out over $600 billion from the altcoin market. In fact, the altcoin season index reading had dropped to 24, indicating it was a BTC season.
Source: CoinMarketCap
Final Thoughts
- Despite the belief that DATs and ETFs can reduce broader altcoin losses, they can also accelerate the dump.
- Over $600B has been wiped out of the altcoin market, and further losses could be likely if the rout deepens.