The question of why altcoins are lagging has been circulating in the crypto community throughout this cycle. Remember, an altcoin is any cryptocurrency other than Bitcoin (BTC), often created to offer alternative features, use cases, or innovations within the blockchain ecosystem.

Unlike previous cycles where altcoins dominated the market with their explosive gains, the current cycle has seen a significant divergence. Altcoins have struggled to gain sustained momentum, leaving many investors wondering if they have missed their moment in the spotlight.

The Unusual Silence in the Altcoin Market

In past crypto cycles, altcoins have been the shining stars, often outperforming Bitcoin and Ethereum (ETH) in terms of percentage gains. These gains were largely driven by the influx of new retail money—fresh investors looking to get a piece of the action. Altcoins were particularly appealing to retail investors due to their lower prices and the potential for massive returns.

However, this time around, the retail frenzy that typically fuels the altcoin market has yet to make a significant impact.

One reason for this could be the evolving market dynamics. The introduction of Bitcoin ETFs has changed the landscape, drawing more institutional investors into the space.

These investors are primarily focused on Bitcoin and, to a lesser extent, Ethereum, rather than the wider array of altcoins. This shift in focus has led to a situation where capital is being locked into ETFs, rather than flowing through the traditional crypto market channels.

The Bitcoin ETF Effect: A New Dynamic in the Market

The launch of Bitcoin ETFs has introduced a new element to the crypto market, one that has significantly impacted the flow of money. ETFs offer a more regulated and familiar investment vehicle for institutions and traditional investors, making Bitcoin more accessible.

As a result, a substantial amount of capital that might have otherwise flowed into altcoins is now being channeled into these ETFs.

This new dynamic could explain why Bitcoin and Ethereum are potentially set to drive the next big leg of the bull market. With large amounts of money tied up in ETFs, there is less liquidity available for the altcoin market. This could mean that the explosive altcoin runs seen in previous cycles may not materialize in the same way this time around.

Could Altcoins Still Have Their Moment?

Despite the current lackluster performance, it’s too early to write off altcoins entirely. There are several scenarios in which altcoins could still see a significant surge, especially if retail investors re-enter the market with enthusiasm. If retail money does start to flow back into the crypto market, it could reignite the altcoin space.

AI Coins: The Next Big Use Case

One category of altcoins that could see a resurgence is AI coins, such as Render Network (RNDR). As artificial intelligence continues to advance and integrate with various industries, AI-related cryptocurrencies could become the next big thing in the crypto world. If retail investors latch onto AI as the newest exciting use case, we could see a strong rally in AI coins.

RNDR already had a heck of a run to kick off the year and is still trading for less than half of its yearly high. Render was one of the hottest cryptocurrencies around over the end of 2023 and the first quarter of 2024. It has shown the ability to pick up and sustain momentum in the right circumstances. If RNDR gets hot once again it should be at the top of your radar. Render has a very good chance of doubling before the year’s end and still has potential to 5X from here.

Memecoins: The Fun Casino Game

Memecoins are like the slot machines of the crypto casino—high-risk, low-odds bets that can deliver massive wins if you hit the jackpot. While they’re often seen as speculative and unpredictable, their viral potential and community-driven hype can lead to explosive gains for those willing to take the gamble.

Memecoins, like Dogecoin (DOGE), have always been a popular choice among retail investors, and I don’t see that changing soon. If retail investors return to the market looking for entertainment and quick gains, memecoins could once again become the talk of the town.

Despite their often criticized lack of utility, memecoins have proven to be resilient and capable of capturing the market’s attention. Memecoins may not be serious investments, but they can produce serious gains if you know how to play them.

Dogecoin is trading for just about 10 cents right now, less than half of its yearly high. DOGE was a fan favorite of retail investors last cycle, so it would not be surprising to see retail jump right back into Dogecoin yet again. Dogecoin hit a high of just under 50 cents last cycle, and if retail comes back in a similar fashion I expect DOGE could 5x again from here.

DeFi Coins: Value in the Best Current Use Case

Decentralized Finance (DeFi) coins, such as Aave (AAVE), represent a more mature segment of the altcoin market. If investors shift their focus towards proven use cases, DeFi could attract significant interest. DeFi projects offer tangible value by providing decentralized lending, borrowing, and other financial services. If the market begins to prioritize utility and real-world applications, DeFi coins could see a strong performance in the next phase of the bull market.

AAVE has had a very solid run over the last month or so. It is finally showing some strength after months of stagnancy. DeFi represents on of the most solid current use cases for blockchain and cryptocurrency technology. Bringing back the power of finance to the end-user is a game changer.

DeFi cuts out centralized middlemen and improves the efficiency of the financial ecosystem. Aave is one of the very best DeFi protocols, and when investors attention shifts back to real use cases I could see AAVE making another big run.

Conclusion: The Wait Continues

While altcoins have yet to have their big moment in this cycle, it’s important to remember that the crypto market is highly dynamic and unpredictable. The current focus on Bitcoin and Ethereum, driven by institutional interest and the advent of ETFs, has changed the market’s behavior. However, if retail investors return in force, or if new narratives such as AI or DeFi gain traction, altcoins could still experience significant gains.

For now, patience is key. The crypto market operates in cycles, and altcoins may just be biding their time before their next big move. Whether it’s AI, memecoins, or DeFi that leads the charge, the altcoin market still holds the potential for explosive growth in the future.

Editor’s Note: Cryptocurrency has been the best returning asset class of the last decade and is know for its parabolic bull markets. It is also a key to a truly diversified portfolio and one of the best hedges against the potential risks that lie ahead in markets. But you need to act now before institutions gobble it all up.

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This article previously appeared on Investing Daily.