Small-cap cryptocurrencies fell to their lowest levels since the outbreak of the epidemic, and speculative sentiment plummeted.

The cryptocurrency market shows no signs of easing the sell-off, with the smallest and riskiest tokens bearing the brunt. The MarketVector Digital Asset 100 Small Cap Index, which tracks the 50 smallest market cap coins out of 100 digital assets, fell to its lowest level since 2020 last Sunday. At this low point, the largest cryptocurrency Bitcoin erased 30% of its gains for the year, just weeks after hitting an all-time high. "Altcoins," seen as a barometer of high-risk speculative sentiment, have vastly underperformed coins with larger market caps in 2025. During past cryptocurrency bull markets, small cap token indices often outperformed large cap token indices due to traders' interest in high-risk, high-return bets. However, this trend reversed after the approval of Bitcoin and Ether exchange-traded products (ETP) in the US last year, making these products the focus of institutional fund flows. Over the past five years, the cryptocurrency small cap index has dropped nearly 8%, while the large cap index has surged about 380%, highlighting the sector's significant fall from favor. Pratik Kara, portfolio manager at Australian hedge fund Apollo Crypto, stated that retail traders are learning from past market cycles. "Not all boats can sail as the tide rises only quality assets will benefit," he added. The entire cryptocurrency market has yet to recover from the crash on October 10th. This event triggered liquidations of around $19 billion, causing the total market value of all tokens to evaporate by over $1 trillion. Since then, market risk aversion has spiked as traders continue to steer clear of the most speculative areas in the market.