A recent analysis by crypto analyst Shanaka highlights a critical juncture for altcoins, presenting what he terms the most binary setup in years. Following a prolonged downturn characterized by failed memecoins, depleted liquidity, and institutional capital heavily concentrated in Bitcoin, signs of a potential altcoin market resurgence are emerging. However, Shanaka emphasizes that this revival is time-sensitive.
The narrative surrounding altcoins in 2024 was bleak, with overwhelming evidence pointing to their demise. Over 1.5 million new tokens were launched, the vast majority lacking any discernible utility. A significant portion, nearly 60%, were identified as malicious, and a staggering 97% of memecoins vanished within months. This environment led to diminished liquidity, eroded investor conviction, and an on-chain transparency that made price movements predictable. Concurrently, Bitcoin ETFs attracted $179.5 billion in assets, with minimal capital spilling over into Ethereum or the broader altcoin market. The traditional flow of capital from Bitcoin to Ethereum and then to altcoins was effectively severed.
The landscape began to shift in 2025.
The filing of over 130 altcoin ETFs with the SEC, followed by the approval of more than 30, injected $5.87 billion in new institutional capital. This influx contributed to a drop in Bitcoin's dominance from 65.1% in June to 58% by November, indicating a broader distribution of capital across the market. Ironically, the same institutions, such as BlackRock, Fidelity, and Bitwise, that were perceived as contributing to the decline of altcoins in 2024 are now instrumental in establishing new investment channels.
However, this potential revival faces a significant challenge: dilution.
THE ALTCOIN RESURRECTION HAS A TIMER
— Shanaka Anslem Perera
Everyone declared altcoins dead.
$179.5 billion in Bitcoin ETF assets. Zero downstream spillover. The cascade that once flowed from BTC to ETH to alts was severed at the source.
1.5 million new tokens launched in 2024. 59% were malicious.… pic.twitter.com/QE8OQnLm70(@shanaka86) December 2, 2025
The Race Between Inflows and Inflation
Shanaka posits that the next phase is governed by a stark mathematical reality. Altcoins are subject to approximately $3 billion in monthly token unlocks, which historically result in an average price decline of 18% following each significant unlock event. If institutional ETF inflows do not outpace the rate at which new supply enters the market, any apparent recovery could prove to be a temporary fluctuation.
He outlines two potential scenarios:
Scenario 1: Alt ETF inflows exceed $50 billion by Q4 2026. In this outcome, altcoin dominance is projected to stabilize between 15% and 25%. The market would likely consolidate, focusing on approximately 100 to 500 robust protocols, and yield-generating infrastructure could become sustainable once again.
Scenario 2: Unlocks outpace absorption. If token unlocks consistently exceed market absorption, altcoin dominance could fall below 10%. This would render most altcoins practically uninvestable for institutional players, leaving only Bitcoin and Ethereum as relevant assets at scale.
Shanaka's perspective suggests that this is less about a traditional market cycle and more about a critical countdown. The past rewarded patience, but the current environment demands precise timing.
He identifies two key metrics that traders should closely monitor:
- •Alt ETF inflows exceeding $1 billion per week: This suggests accumulation and positive institutional sentiment.
- •Token unlocks surpassing $5 billion per month: This signals potential selling pressure and an increased risk of market downturns.
While a genuine altcoin resurgence may be underway, the available window of opportunity is finite and potentially closing faster than widely anticipated.