Crypto and stock performance since January 2024 suggests the new “altcoin trading” is just stock trading.
The S&P 500 returned roughly 25% in 2024 and 17.5% in 2025, rising to about 47% in two years. The Nasdaq-100 gained 25.9% and 18.1% over the same period, for a cumulative gain of almost 49%.
The CoinDesk 80 Index, which tracks the next 80 crypto assets after the top 20, fell 46.4% in the first quarter of 2025 alone and was down about 38% by mid-July.
The MarketVector Digital Assets 100 Small-Cap Index fell to its lowest level since November 2020 in late 2025, wiping out more than $1 trillion from the total crypto market capitalization.
The divergence is not a rounding error. Broad altcoin baskets delivered negative returns with volatility equal to or higher than equities, while US stock indexes posted double-digit gains with controlled declines.
The question for Bitcoin investors is whether diversifying into smaller crypto assets provided any risk-adjusted benefit, or whether it simply added exposure to a negative Sharpe ratio while maintaining stock-like correlation.
Choosing a credible altcoin index
For the analysis, CryptoSlate tracked three altcoin indices.
The first is the CoinDesk 80 Index, launched in January 2025, which tracks the next 80 assets after the CoinDesk 20, creating 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 tokens in a basket of 100 assets and serves as the ‘junk end of the market’ barometer.
A research product rather than a tradable benchmark, Kaiko’s Small-Cap Index provides a purely quantitative look at the sell-side of the smaller-asset cohort.
Together, these three offer a spectrum: a broad alt basket, high beta microcaps, and a quantitative research perspective. All three tell the same story.
On the other hand, the baseline for equity is simple.
Major US indices traded in the mid-20s in 2024 and in the high teens in 2025, with relatively shallow price declines. The S&P 500’s worst decline in the period remained in the mid-teens, while the Nasdaq-100 remained in a strong uptrend.
Both indices returned year after year without giving back meaningful gains.
Broad altcoin indices followed a different path. The CoinDesk Indices report shows that the CoinDesk 80 returned -46.4% in the first quarter alone, while the large-cap CoinDesk 20 fell “only” -23.2%.
As of mid-July 2025, the CoinDesk 80 was down about 38% this year, while the CoinDesk 5, which tracks Bitcoin, Ethereum and three other majors, gained 12% to 13% over the same period.
Andrew Baehr of CoinDesk Indices described the dynamics for ETF.com as “identical correlation, completely different P&L.”
The CoinDesk 5 and CoinDesk 80 showed a correlation of 0.9, meaning they were moving in the same direction, but one delivered low double-digit gains while the other lost almost 40%.
The diversification benefit of holding smaller alts turned out to be negligible, while the performance damage was severe.
The small cap segment performed worse. Bloomberg coverage of the MarketVector Digital Assets 100 Small-Cap Index noted that in November 2025, the index fell to its lowest level since November 2020.
Over the past five years, the small-cap index has returned approximately -8%, compared to approximately +380% for its large-cap counterpart. Institutional flows rewarded size and punished tail risk.
Measuring altcoin performance in 2024 shows that Kaiko’s small-cap cohort fell more than 30% this year, while mid-caps struggled to keep pace with Bitcoin.
The winners focused on a limited number of big names, such as Solana and XRP. At the time, altcoin trading volume dominance over Bitcoin climbed back to 2021 highs, but 64% of alt volume was concentrated in the top 10 altcoins.
Liquidity did not disappear from crypto, but rose up the quality curve.
Sharpe ratios and withdrawals
Risk-adjusted returns tilt the equation even further. The CoinDesk 80 and small-cap alt indices delivered deep negative returns with stock-like or higher volatility.
CoinDesk 80’s -46.4% came in one quarter. MarketVector’s small-cap index hit a pandemic-era low in November after another decline.
The broad alt indices saw multiple peak-to-trough moves of over 50% at the index level: Kaiko’s -30%+ for small caps in 2024, the CoinDesk 80’s -46% in Q1 2025, and small-cap indices revisiting 2020 lows in late 2025.
In contrast, the S&P 500 and Nasdaq-100 posted back-to-back total returns of 25%/17%, with a worst-case decline in the mid-teens. US stocks were volatile but under control. Crypto indices have been volatile and destructive.
Even if we consider higher volatility for altcoins as a structural feature, their payoff per unit of risk in 2024 and 2025 was poor compared to holding US stock indices.
The broad alt indices showed negative Sharpe ratios through 2024 and 2025, while S&P and Nasdaq showed strongly positive Sharpe ratios, before adjusting for crypto’s higher volatility. After adjustment, the gap widened further.
| Index / active | Universe | Profile 2025 (up to and including Q3/Q4) |
|---|---|---|
| S&P 500 TR | Major US stocks | +17.5% for 2025, on top of +25% in 2024, with modest corrections. |
| Nasdaq-100TR | Growth of US megacaps | +18.1% in 2025, after +25.9% in 2024; two-year compounding of almost +50%. |
| MuntDesk 80 (CD80) | Wide alto basket ex top 20 | –46.4% in Q1 2025; approximately -38% YTD in mid-July. |
| MarketVector DA 100 Small Cap | 50 smallest in a basket of 100 assets | New four-year low in November 2025, and has underperformed the large-cap index since early 2024. |
Bitcoin Investors and Crypto Liquidity
Liquidity concentration and quality migration are the first implications. Bloomberg and Whalebook coverage of the MarketVector small-cap index highlighted that smaller alts have consistently underperformed since early 2024, with institutional flows instead funneled into Bitcoin and Ethereum exchange-traded products.
Combined with Kaiko’s observation that alt volume dominance returned to 2021 levels but was concentrated in the top 10 altcoins, the pattern is clear: liquidity rose on the quality curve rather than abandoning crypto entirely.
The ‘alt season’ functioned as a basic transaction and not as a structural outperformance. CryptoRank’s altseason index rose to around 88 in December 2024 and then dropped to 16 in April 2025, a full round trip.
The 2024 alt season saw a classic setback, but by mid-2025 the wide baskets had given back most of their gains while the S&P and Nasdaq recovered.
For advisors and allocators considering diversification beyond Bitcoin and Ethereum, CoinDesk’s data provides a clear case study.
A concentrated large-cap crypto index (CoinDesk 5) has seen low price gains in mid-2025, while the diversified alt index (CoinDesk 80) has lost almost 40%. Still, the two indices showed a correlation of 0.9.
Investors did not reap meaningful diversification benefits by piling into smaller alts. They accepted much worse returns and declines than Bitcoin/Ethereum or US stocks, while maintaining their directional exposure to the same macro factors.
Capital treats most alts as tactical transactions rather than structural allocations. Spot Bitcoin and Ethereum ETFs offered a significantly better risk-adjusted ride over 2024 and 2025, as did US stocks.
Altcoin liquidity is consolidating into a limited cohort of “institutional quality” names such as Solana and XRP, and a handful of others that have demonstrated independent catalysts or regulatory clarity. The breadth at index level is penalized.
What does this mean for the liquidity of the next cycle?
The 2024 and 2025 periods tested whether altcoins could deliver diversification value or outperformance in a risky macro environment. U.S. stocks posted consecutive years of double-digit gains and manageable declines.
Bitcoin and Ethereum gained institutional acceptance through spot ETFs and benefited from regulatory de-escalation.
Broad altcoin indices lost money, suffered deeper price declines and maintained high correlation with large-cap cryptocurrencies and stocks without offsetting the extra risk.
Institutional flows followed performance. The MarketVector small-cap index’s -8% five-year return versus the large-cap index’s +380% gain reflects capital migration into assets with clear regulations, liquid derivatives markets and custody infrastructure.
CoinDesk 80’s -46% first quarter and subsequent -38% year-to-date performance in mid-July indicate that the migration has accelerated rather than reversed.
For BTC/ETH investors assessing whether to diversify into smaller crypto assets, the 2024/25 data provides a clear answer: broad alt baskets underperformed US stocks on an absolute basis, underperformed Bitcoin and Ethereum on a risk-adjusted basis, and failed to deliver diversification benefits despite a nearly 0.9 correlation with large-cap crypto.