Bitcoin holds up better than alts while capital exits smaller tokens, and this trend is becoming harder to ignore. Over the past three months, Bitcoin itself has been down roughly 26%, yet compared to the rest of the crypto market, it now looks like a form of capital protection. While many expected money to rotate into new narratives, data from Glassnode and other on-chain analysts show something different: capital is moving back toward Bitcoin as volatility spreads across altcoins. This shift suggests that investors are less interested in chasing themes and more focused on preserving value until clearer trends appear.
Three-month drawdowns show a clear gap.
Recent performance across major crypto sectors highlights why Bitcoin is standing out. BTC is down around 26% from its highs, trading near $86k. That decline is still smaller than the broader crypto market, which dropped roughly 27.5% over the same period.
Ethereum has performed worse, falling close to 36% and slipping below $3,000. Other sectors have seen even steeper losses. AI tokens are down about 48%, memecoins nearly 56%, real-world asset tokenization projects around 46%, and DeFi tokens roughly 38%. These numbers explain why many traders now see Bitcoin as the least damaging place to stay exposed.
Where capital is actually moving
Glassnode data show that average returns across almost every crypto sector are lower than Bitcoin’s. The story indicates that the concentration of capital in BTC replaces the spreading of capital into alternative thematic investments.
Typically, BTC attracts money from altcoins that appear to be volatile. This occurs due to the availability of much larger liquidity pools and much stronger demand for BTC during times of financial distress. All these characteristics make BTC more predictable in how it will behave and fit into the overall asset allocation of its holders than alternative assets (aka altcoins), where the investor(s) will need to guess which sector will recover first.
Dominance slips, but Bitcoin remains the anchor.
Some analysts have said that, following Bitcoin’s decline in dominance this spring, it created an environment for Ethereum to take off as a leader, along with other narratives beyond Bitcoin. But all attempts to create leadership have failed to establish long-term momentum. The clean-up phase of replacing leveraged trades with more disciplined positions has caused altcoins to lose a lot of their momentum. As we come to the end of 2020, most altcoins have exhibited a renewed weakness.
Market observers such as Bitcoin Vector maintain that the cryptocurrency market is still trying to create a steady anchor point. While there may be fluctuations in the marketplace over shorter or longer time periods, real money shows that Bitcoin still acts as an anchor for the crypto market. Even when Bitcoin’s dominance metrics were in decline due to strong uncertainty in April and May, Bitcoin continued to see a majority of capital return when uncertainty was rising again.
What this means for market strategy
Right now, many altcoins act like pure beta plays. They tend to move more than Bitcoin in both directions, but with less conviction behind them. That makes timing far more difficult.
Because of this, some investors prefer holding a Bitcoin core position instead of trying to catch local bottoms across multiple sectors. History shows that if a new rally phase begins, Bitcoin is usually the first asset to benefit. Strong altcoin niches often follow later, once confidence and liquidity return.
Conclusion
Over the past three months, it has become evident that the cycle of gaining confidence in a trend is very much alive and well. Many of the alt(security) coins “may have provided” huge profits during the cycle peak. Nevertheless, the safe haven of the Crypto Market (Bitcoin) continues to act as a refuge for investors in times of uncertainty regarding the future of cryptocurrency markets.
