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As Bitcoin (BTC) continues to strengthen its grip on the crypto market, Kaiko Research says the broader altcoin complex is becoming more fragile—despite a handful of tokens posting standout returns. The firm’s latest study argues that while pockets of the market can still deliver ‘outsized performance’ and limited diversification benefits, liquidity and risk appetite ultimately keep converging back toward BTC when conditions turn defensive.

In a report published on May 14, 2026 UTC under analyst Thomas Probst, Kaiko compared performance and market structure across major tokens—including Ethereum (ETH), Solana (SOL), XRP (XRP), and Cardano (ADA)—as well as smaller or more niche assets such as Hyperliquid (HYPE), Canton Coin (CC), Tron (TRX), and Dogecoin (DOGE). The dataset spans from 2025 through May 2026, examining returns, correlations, liquidity, spot volume concentration, and derivatives positioning.

The central finding is that large-cap altcoins remain tightly tethered to Bitcoin’s directional moves. When BTC rallies, major altcoins typically rise alongside it—but when BTC corrects, drawdowns across the altcoin complex tend to accelerate. Kaiko highlighted Ethereum as an example of how altcoins can outperform during favorable stretches: over the observation window, ETH at one point delivered gains above 85%, while BTC failed to exceed 20%. Solana and XRP also beat Bitcoin during the risk-on phase of the 2025 summer rally, when speculative positioning broadly returned to the market.

That upside, however, came with amplified downside. Following a sharp selloff on Oct. 10, Kaiko found that Cardano, Solana, and XRP slid into materially weaker performance—down roughly 40% to 70% relative to their May 2025 levels. The report frames this as a recurring structural feature of altcoins: higher beta can boost returns during expansions, but it also magnifies losses in contractions, particularly when ‘BTC dominance’ is rising.

Still, not all altcoins moved in lockstep with Bitcoin. Kaiko pointed to Hyperliquid, Canton Coin, and Tron as notable exceptions over the past six months, with returns above BTC even while Bitcoin spent an extended period in negative territory. Some of these tokens posted gains in the +25% to +95% range, while Canton Coin at one stage exceeded +100%, according to the analysis.

Kaiko argues that the outperformance cannot be dismissed as mere high-beta spillover. The firm observed relatively low 30-day rolling correlations between these assets and BTC, with Canton Coin and Tron even showing negative correlation in certain intervals. That pattern suggests there can be selective opportunities for ‘diversification’ inside an otherwise Bitcoin-led market—though Kaiko cautioned that excess returns have tended to coincide with structurally elevated volatility. Hyperliquid’s annualized volatility, for example, was measured at 2.4 times that of Bitcoin.

Liquidity dynamics were also more complicated than standard narratives imply. Altcoin volatility is often attributed to thin order books, but Kaiko flagged Dogecoin as an outlier: DOGE showed market depth that at times exceeded Bitcoin’s, yet its volatility remained about 2.07 times higher than BTC. The takeaway, Kaiko said, is that even with improved liquidity, token-specific speculative demand and event-driven flows can still drive abrupt price swings.

In Dogecoin’s case, Kaiko linked deeper liquidity to expectations around exchange-traded product (ETP) developments. The report argues that an ETP narrative can attract market-making and hedging activity, mechanically thickening order books. But better liquidity does not automatically translate into price stability—especially in altcoin markets where high turnover and speculative trading can intensify volatility.

Spot trading activity further underscored how concentrated the altcoin market remains. Kaiko estimated Ethereum accounts for roughly 30% to 50% of spot trading value among major altcoins, maintaining a clear lead. Solana and XRP followed with approximately 8% to 15% each. The structure suggests that even when new tokens capture attention, actionable liquidity remains heavily clustered in a small number of large-cap names.

Across the entire crypto market, Bitcoin’s share of trading volume held around 40% to 50% and trended gradually higher from 2025 into 2026. Kaiko interprets this as evidence that when macro uncertainty rises and risk appetite fades, trading activity and capital rotate back toward BTC—still viewed as the market’s most liquid and resilient venue for risk reduction.

Derivatives data reinforced the same message. In perpetual futures, the Ethereum–Tether (ETH/USDT) contract remained the largest altcoin derivatives market by trading activity, outpacing pairs tied to Solana, XRP, Dogecoin, Hyperliquid, and Cardano. Kaiko described ETH as the key benchmark for altcoin exposure, reflecting its persistent role as the primary hedgeable large-cap alternative to Bitcoin.

But participation cooled noticeably after the 2025 peak. Kaiko estimated that altcoin perpetual futures volumes have fallen about 50% from the highs seen in the summer and autumn of 2025. Open interest also dropped sharply around the Oct. 10 selloff and amid market sensitivity to headlines tied to Kevin Warsh and the Federal Reserve chair nomination narrative. While the pullback was most visible in ETH/USDT, the contraction spread quickly across other major altcoin pairs.

The simultaneous decline in volume and open interest is significant, Kaiko said, because it points to ‘de-risking’ rather than routine churn. Investors appear to be reducing position sizes and overall exposure in altcoin derivatives—an adjustment consistent with the spot market’s drift toward Bitcoin concentration.

Kaiko’s broader conclusion is that the crypto market remains structurally Bitcoin-centric. Select altcoins can post differentiated returns and occasionally offer lower correlation, but the deepest liquidity, the largest share of volume, and the clearest positioning behavior in risk-off phases continue to favor BTC. In an environment of strengthening ‘BTC dominance,’ Kaiko argues, Bitcoin’s capital-absorbing capacity and relative durability become even more pronounced.

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