A recent study conducted by Swan, a company providing Bitcoin financial services, has shown that most alternative cryptocurrencies (altcoins) tend to rapidly lose value when compared to Bitcoin (BTC). This underscores Bitcoin's stability as a preferable asset for preserving capital in the volatile cryptocurrency market.
Swan shared its findings in a comprehensive discussion on X, previously known as Twitter. The study revealed that altcoins not only perform worse than Bitcoin but often experience significant declines relative to it. The research focused on the performance of the top 300 altcoins over a five-year period, observing how long it took for these assets to lose 90% of their value compared to Bitcoin after reaching their peak prices.
According to Swan, the median altcoin reached a 90% decrease in value within 10-20 months. Some altcoins, such as Terra (LUNA), Ontology Gas (ONG), and Bitgert (BRISE), crashed the fastest, plummeting to the 90% mark in less than two months. Established altcoins like Cardano (ADA) and XRP (XRP) took around 36 months, while Litecoin (LTC) and Monero (XMR) experienced declines over 69 months and six years, respectively.
Swan's analysis extended to 45 altcoins that had not yet reached the 90% drop mark. These altcoins, despite not collapsing, showed an average drawdown of 76% from their peak value. Even the best-performing altcoin among them was still down by 43% compared to Bitcoin.
Swan emphasized that Bitcoin remains the standard for capital preservation, highlighting that altcoins not only fail to hedge against Bitcoin but actually lose value in comparison. The study suggests a fundamental problem within the altcoin market, indicating that these alternative cryptocurrencies struggle to sustain their value over time compared to Bitcoin.
The analysis also pointed out that long-term outperformance by altcoins is rare, with survivorship bias concealing the broader market's decay. The increase in the number of altcoins created further saturates the market, leading to concerns about liquidity fragmentation and casting doubt on the potential return of the traditional "altcoin season."
This shift is partly due to Bitcoin's growing dominance in the market, supported by institutional adoption and increasing regulatory attention. While Bitcoin continues to strengthen its position as the primary digital asset, altcoins face challenges in maintaining relevance and attracting investors amidst Bitcoin's ongoing success.