Altcoins face mounting downside pressure as trading volumes dry up…AI tokens show relative strength

Total volume down 60% from the peak

Bittensor and Render up over the past month

"AI will become crypto’s core narrative"

The altcoin market is seeing delayed volume recovery amid Middle East-driven geopolitical uncertainty, with volatility rising and investor sentiment continuing to weaken. Still, some selective rebound moves are being detected, centered on artificial intelligence (AI)-related projects.

According to CoinMarketCap on the 1st, total cryptocurrency trading volume peaked at about $232.6 billion (about KRW 350 trillion) in October last year and has continued to trend lower, shrinking to around $91.2 billion (about KRW 137 trillion) on the day. That represents a drop of more than about 60%, and the industry is seeing estimates that trading volume for some altcoins has contracted by as much as 80%.

By contrast, even in a down market, AI-related tokens such as Bittensor, Fetch.ai and Render posted gains of 94%, 54% and 28%, respectively, over the past month, showing comparatively strong performance. Crypto-focused media outlet CoinDesk analyzed that “as AI infrastructure proliferates, capital inflows are emerging into related cryptocurrencies.”

The industry is also raising the possibility that AI could emerge as the crypto market’s key narrative going forward. Robert Mitchnick, head of digital assets at BlackRock, said, “Institutional investors are focused on a handful of core assets such as Bitcoin and Ethereum,” adding that “rather than a broad set of altcoins, they are paying attention to the role cryptocurrencies can play as AI adoption spreads.” He added that they “could function as infrastructure used in the AI economy.”

Some also interpret this trend as a structural change in the market. Andrei Grachev, co-founder of DWF Labs, said, “As institutional capital concentrates in large assets such as Bitcoin and Ethereum, the broad-based, across-the-board altcoin rallies seen in the past are gradually weakening,” adding that “recently, funds tend to move selectively around specific narratives and sectors.”

With downside pressure dominating the broader altcoin market, there are calls for a cautious approach. Digital asset analyst Benjamin Cowen said, “The overall market, including altcoins, remains in a bearish structure, so additional downside pressure could persist,” adding, “Considering the pattern around U.S. midterm election periods, there is also a possibility that weakness resumes from this month.”

Middle East-driven geopolitical tensions and policy uncertainty are also acting as factors that reinforce downside pressure. In the U.S. Congress, discussions are advancing on the Clarity Act, a crypto market structure bill, as it secures bipartisan support, but key issues—including stablecoin regulation and coordination of industry interests—still remain. The bill is expected to help improve market liquidity by easing institutional uncertainty.

Meanwhile, some view the current level as an opportunity. Crypto strategist Michaël van de Poppe said, “Within the Ethereum ecosystem, stablecoin supply has roughly tripled versus 2022, and daily transactions have increased more than twofold, with network metrics steadily expanding,” adding that “it is worth watching the possibility that major altcoins could rebound, led by Ethereum, depending on changes in the market environment.”

Kang Min-seung, Bloomingbit reporter minriver@bloomingbit.io