The performance of cryptocurrencies and stocks since January 2024 suggests that the new “altcoin trading” is just that, stock trading.
The S&P 500 returned about 25% in 2024 and 17.5% in 2025, doubling to nearly 47% over two years. The Nasdaq 100 gained 25.9% and 18.1% over the same period, for cumulative gains near 49%.
The CoinDesk 80 Index, which tracks the next 80 assets after the top 20, fell 46.4% in the first quarter of 2025 alone, and is down nearly 38% year-to-date through mid-July.
The MarketVector Digital Assets 100 Small Cap Index fell to its lowest level since November 2020 by late 2025, wiping out more than $1 trillion from the total cryptocurrency market capitalization.
The difference is not a rounding error. Broad altcoin baskets delivered negative returns with equal or higher volatility than stocks, while US stock indices posted double-digit gains with controlled drawdowns.
The question for Bitcoin investors is whether diversification into smaller crypto assets offers any risk-adjusted benefit, or whether it simply adds exposure to a negative Sharpe ratio while maintaining a similar correlation to stocks.
Choose a reliable altcoin indicator
For the analysis, CryptoSlate tracked three altcoin indicators.
The first is the CoinDesk 80 Index, launched in January 2025, which tracks the next 80 assets after the CoinDesk 20, providing a diversified basket beyond Bitcoin, Ethereum and the biggest names.
The second is the MarketVector Digital Assets 100 Small-Cap Index, which captures the 50 smallest coins in a basket of 100 assets and serves as a measure of the “junk end of the market.”
The Caico Small Cap Index, which is a research product and not a tradeable index, offers a clean quantitative lens for the sell side on the smaller asset pool.
Together, these three offer breadth: a broad alternative basket, high beta small caps, and a quantitative research perspective. All three tell the same story.
On the other hand, the bottom line for stocks is straightforward.
Major US stock indexes hit the mid-20s in 2024, and highs in 2025, with relatively shallow drawdowns. The S&P 500’s worst decline of the year remained in the mid-teens, while the S&P 500 remained in the mid-teens. Nasdaq-100 remains in a strong uptrend.
Both indices have doubled year-over-year returns without giving up meaningful gains.
Broad altcoin indices have followed a different path. The CoinDesk Trends report showed the CoinDesk 80 returned -46.4% in the first quarter alone, while the CoinDesk 20 large-cap stocks fell “only” -23.2%.
As of mid-July 2025, the price of the CoinDesk 80 was down approximately 38% year-to-date, while the CoinDesk 5, tracking… Bitcoin, Ethereumand three other major companies, rose 12% to 13% during the same period.
Andrew Beer of CoinDesk Indices described the dynamic for ETF.com as “identical correlation, very different P&L.”
CoinDesk 5 and CoinDesk 80 showed a correlation of 0.9, meaning they moved in the same direction, but one had low double-digit gains while the other lost nearly 40%.
The diversification benefits of holding smaller alternative bonds proved negligible, while the performance penalty was severe.
The small business sector performed worse. Bloomberg’s coverage of the MarketVector Digital Assets 100 small-cap index noted that by November 2025, the index had fallen to its lowest level since November 2020.
Over the past five years, the small-cap index has returned approximately -8%, versus approximately +380% for its large-cap counterpart. Institutional flows have rewarded size and punished secondary risk.
When measuring the performance of altcoins in 2024, Kaiko’s small-cap group is down more than 30% for the year, while mid-caps have struggled to keep up with Bitcoin.
The winners focused on a narrow group of big names, e.g Solana and XRP. At that time, altcoins’ trading volume dominance versus Bitcoin had risen back to 2021-era highs, but 64% of altcoins’ trading volume was concentrated in the top 10. Alternative currencies.
Liquidity from cryptocurrencies did not disappear, but rather went up the quality curve.
Sharpe ratios and drawdowns
Risk-adjusted returns tend to compare even further. The CoinDesk 80 and small-cap alternative indices have delivered deep negative returns with stock-like or higher volatility.
CoinDesk’s 80’s decline came in at 46.4% in one quarter. MarketVector’s measure of small companies surged to pandemic-era lows in November after another decline.
Broad alternative indices have seen multiple peak-to-trough moves exceeding 50% index level: Caico -30%+ small-cap in 2024, CoinDesk 80-46% in Q1 2025, and small-cap indices return to 2020 lows in late 2025.
In contrast, the S&P 500 and Nasdaq-100 posted sequential total returns of 25%/17% with drawdowns occurring in the mid-20s at worst. US stocks were volatile but were under control. Cryptocurrency indices have been volatile and devastating.
Even granting higher volatility for altcoins as a structural advantage, their returns in 2024 and 2025 per unit of risk were poor compared to US equity indices.
Broad altcoin indices posted negative Sharpe ratios over the 2024 and 2025 period, while the S&P and Nasdaq presented strongly positive Sharpe ratios before adjusting to the high volatility of cryptocurrencies. After the adjustment, the gap widened further.
| Index/Assets | universe | 2025 Profile (until Q3/Q4) |
|---|---|---|
| Standard & Poor’s 500 TR | Large US stocks | +17.5% for 2025, plus +25% for 2024, with modest corrections. |
| NASDAQ-100 TR | The growth of giant companies in the United States | +18.1% in 2025 after +25.9% in 2024; 2 year compound is near +50%. |
| CoinDesk 80 (CD80) | Wide alternative basket of top 20 | -46.4% in the first quarter of 2025; About -38% since the beginning of the year until mid-July. |
| MarketVector DA 100 Small Cap | The smallest 50 in a basket of 100 assets | A new four-year low in November 2025, underperforming the larger index since early 2024. |
Bitcoin investors and crypto liquidity
Liquidity concentration and quality of migration are the first effect. Bloomberg and Whalebook’s coverage of the MarketVector Small Cap Index confirmed that since early 2024, smaller altcoins have consistently lagged, with institutional flows being directed into Bitcoin and Ethereum exchange-traded products instead.
Combined with Kaiko’s observation that alt volume dominance is back to 2021 levels but concentrated in the top 10 altcoins, the pattern is clear: liquidity has moved up the quality curve rather than exiting cryptocurrencies entirely.
The “alternate season” was the underlying trade, not the structural outperformance. The alternative CryptoRank rose to around 88 by December 2024, then collapsed back to 16 by April 2025, a complete round trip.
The 2024 swing season delivered a classic hit, but by mid-2025, the broad baskets had regained most of their gains, while the S&P and Nasdaq indices worsened.
For advisors and dealers considering diversification beyond Bitcoin and Ethereum, CoinDesk data provides a clear case study.
The large-cap concentrated crypto index (CoinDesk 5) gained year-to-date lows by mid-2025, while the diversified alternative index (CoinDesk 80) lost nearly 40%. However, the two indicators showed a correlation of 0.9.
Investors did not gain a meaningful diversification benefit from accumulating in smaller alternative bonds. They accept much worse returns and withdrawals than Bitcoin/Ethereum or US stocks, while maintaining directional exposure to the same macroeconomic drivers.
Capital treats most alternatives as tactical trades rather than structural allocations. Bitcoin and Ethereum ETFs provided a much better risk-adjusted ride through 2024 and 2025, as did US stocks.
Altcoin liquidity is clustered in a narrow group of “institutional grade” names, such as Solana, XRP, and a handful of others that have demonstrated independent catalysts or regulatory clarity. Index level breadth is penalized.
What does it mean for liquidity in the next session?
The 2024 and 2025 periods tested whether altcoins can offer diversification value or outperformance in a risk-laden macro environment. US stocks have posted consecutive years of double-digit gains with manageable drawdowns.
Bitcoin and Ethereum have gained institutional acceptance through spot ETFs and have benefited from regulatory escalation.
Broad altcoin indices lost money, suffered deeper drawdowns, and maintained a high correlation to cryptocurrencies and large-cap stocks without offering compensation for the additional risk.
Institutional flows were tracking performance. The MarketVector small-cap index’s five-year return of -8% versus the large-cap index’s gain of +380% reflects a migration of capital into assets with regulatory clarity, liquid derivatives markets, and custody infrastructure.
CoinDesk 80’s Q1 performance of 46% and subsequent performance of 38% year-to-date through mid-July suggest that the migration has accelerated and not reversed.
For BTC/ETH investors evaluating whether to diversify into smaller crypto assets, the 2024/25 data provides a clear answer: broad alt baskets underperformed US equities on an absolute basis, and Bitcoin and Ethereum underperformed on a risk-adjusted basis, failing to realize the benefits of diversification despite maintaining a correlation near 0.9 with large-cap cryptocurrencies.
