Are altcoins underperforming?
If you judge investments solely in dollars or euros, you can sometimes miss the broader perspective. Compared to strong benchmarks like the Nasdaq, the altcoin market has been underperforming for years, weighing on market sentiment. Yet something remarkable is happening in the background: crypto is moving toward the heart of the financial system. In this edition of BitvavoĀ Market News,Ā these two threads come together: a market searching for direction, and an infrastructure that is rapidly maturing.
Market update
We often express the prices of crypto assets in euros or dollars. And we measure the performance of our investments, the profit or loss, in government funds. Over weeks and months, that works fine. But when you look further back, the devaluation of that money starts to matter. Over the years, the yardstick keeps shrinking. The number in your portfolio goes up, but you can buy fewer groceries with it.
If you want to see how your investments are really performing over several years, it makes sense to measure prices not just in euros and dollars, but against a benchmark that has long tracked or outpaced inflation, such as gold or a major stock index.
The total market value of the altcoin index 'total2es', which ranks 2 through 125 on the crypto market cap list, excluding stablecoins, now stands at $950 billion, well above the $350 billion of its 2017 peak and 2022 bottom. Compared to the US tech index Nasdaq 100, things look less promising. The altcoin market is only slightly above its bear market low, and still below its 2017 peak.
That helps explain the gloomy mood in the altcoin market. A trader is not too concerned withĀ how prices develop over the long term. But most altcoin investors, when compared to tech stocks, have effectively been stuck in a bear market for four years.
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Crypto moves closer to banking system
Five major crypto companies have been granted national banking licenses in the United States. BitGo, Circle, Fidelity Digital Assets, Paxos, and Ripple are now permitted to operate as so-called trust banks, under the supervision of the U.S. regulator, the OCC. This does not make them traditional banks that offer loans or savings accounts, but it does give them a formal place within the financial system.
That may sound like a minor detail, but it solves a problem that has been plaguing the industry for years. Crypto was trapped in a kind of no-man's-land: too large and important to exclude, but without a suitable legal framework. This friction was especially problematic in areas where trust and responsibility are crucial.
Take custody, for example - institutional investors want to hold digital assets, but only if it's clear who is ultimately responsible. No gray areas between tech company and bank, no fragmented oversight. Without federally recognized trusts, this remained a barrier.
The same applied to stablecoins. Companies were managing billions of dollars in reserves, effectively functioning as banks, but without the corresponding legal status. This works as long as markets remain calm, but raises questions in times of stress: who supervises, and which rules apply?
Tokenization rain into similar issues. Digital versions of shares or bonds require not just code, but also legal structure, administration, and oversight. Without a bank-like infrastructure, many projects never moved beyond the pilot stage.
These trust licenses fill that gap - and they say a lot about where we stand today. Crypto didn't need banks to come into existence, but the financial system does need them to truly integrate crypto. That is what is happening here. Anyone watching institutional behavior can see that crypto is no longer being ignored or resisted, but is being integrated step by step, and on terms the system understands. This is not the end point, but it is a clear move inward.
In other news
OCC gives US banks the green light for crypto trading.Ā The US banking regulator has confirmed that national banks are allowed to facilitate crypto transactions and even act as intermediaries. In practical terms, banks may buy and sell crypto on behalf of clients, provide liquidity, and settle transactions, as long as risk management and compliance are in order. This isn't a license to speculate on their own balance sheets, but it does normalize crypto as a financial product.
PNC Bank opens direct bitcoin trading to wealthy clients.Ā The US banking group now offers private banking clients spot Bitcoin trading, directly within the bankās own environment. It is a small but significant step: this conservative customer segment is only given access once compliance and custody are fully in place. PNC Bank operates in 27 U.S. states, with nearly 2,700 branches and 10,000 ATMs.
DTCC gets approval to experiment with tokenization.Ā The American securities clearing house has received a so-called no-action letter from the SEC. DTCC wants to test tokenized versions of stocks and funds in a controlled environment, and now has confirmation that the SEC will not intervene. DTCC is the backbone of Wall Street and processes trillions of transactions daily. The SEC's decision is widely seen as a green light: tokenization can now shift from theory to infrastructure.
Interactive Brokers puts stablecoins alongside bank account.Ā The US broker now allows clients to fund their investment accounts directly with stablecoins, without using a bank as an intermediary. What's striking is that this isn't coming from a fintech, but from a long-established player that also offers stocks, options and futures. Interactive Brokers has more than 4 million customers worldwide, representing hundreds of billions of dollars in invested capital.
Satoshi Radio: InĀ the latest episode of Satoshi Radio, the contours of a mature crypto market come further into focus. For example, cryptocurrencies in the US may now serve as collateral on regulated derivatives exchanges. The position of Strategy is also discussed, which is fighting for its place in major stock indices. Furthermore, the hosts pay attention to the words of Fed Chairman Jerome Powell and of course to the state of the market.
This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it. Bitvavo makes no guarantees regarding the accuracy or completeness of the provided information. Investments involve risks. There is a possibility of losing your entire invested capital.