The crypto market’s most speculative tokens are suffering another blow as a $200 billion wipeout is occurring. It indicates a change in trader behaviour and a fading appetite for high-risk bets. The downturn began in early October and impacted altcoins far more severely than Bitcoin, leaving thousands of small tokens drifting lower with fewer buyers left to support them. 

Mid- And Micro-Cap Cryptos Drop To Weakest Level Since 2020

A MarketVector index tracking 50 mid- and micro-cap cryptocurrencies dropped nearly 70% this year, bringing it to its weakest level since the start of 2020. Once-popular favorites like Dogecoin have crashed more than 50% from September highs, while joke tokens and experimental DeFi projects have been abandoned by a retail crowd that once drove spectacular price surges. 

The enthusiasm that fuelled previous bull runs is fading fast, and many traders are diverting their energy somewhere else. Some are returning to traditional high-volatility assets with proven track records, while others are turning to digital entertainment options that feel more predictable. For example, many retail users are now experimenting with real money slots that accept crypto deposits to gamble online, since these offer more certainty, instant payouts, and privacy while playing with crypto (source: https://esportsinsider.com/us/gambling/real-money-slots). This trend shows how sentiment has shifted during this downturn.  

Reasons For The Crash

One reason for the crash is due to intense competition for retail dollars. Zero-day options, leveraged EFTs, speculative tech stocks, and prediction markets offer quick upside and fewer unknowns than small-cap tokens. During the meme-coin boom years, buying early and waiting for a “greater fool” almost guaranteed success. But this no longer holds true. 

Prices have stopped rising just because new buys appear; instead, investors are scrutinising tokens the way they would evaluate companies, looking for revenue, users, or working products. 

“For years, many tokens appreciated simply because of market cycles rather than real progress; and that era is ending,” said Shuyao Kong, founder of Megaeth. “Today it’s influenced by cypherpunks, traders, Wall Street institutions, and even politics. No single narrative moves the market anymore, and the rise of traditional valuation frameworks is unsettling for some.”

Even governance tokens tied to structured projects have dropped. They’re being dragged down by thin liquidity and less retail participation. Many new places to speculate are also more accessible. Emerging products that track real companies, basically crypto-based stock futures, allow traders to now bet on giants like Apple, Nvidia, and Tesla. While it is still a niche corner of the market, its rising popularity shows where speculative behavior is moving to. 

Daily volumes for small- and mid-cap derivatives have fallen sharply on Hyperliquid. However, prediction-market activity on Polymarket has reached record levels. Big platforms are also pivoting: Robinhood is doubling down on sports betting, Gemini Space Station is preparing prediction-market contracts, and Coinbase has increased its alternative-asset offerings. 

Billions of dollars that were previously circulated into altcoins have flowed into Bitcoin EFTs, reducing one of the sector’s most important sources of liquidity. 

Oversupply also contributed to the crash. Several projects released large batches of tokens this year, weighing on prices. The launch of the Trump memecoin drained liquidity from dozens of smaller speculative assets. This shows how fragile demand has become. 

A couple of coins, like BNB and HYPE, have held up due to buyback models, but they’re the exceptions. Retail traders are no longer interested in altcoins like they were in previous cycles. Instead, they’re turning to other emerging speculative sectors, like AI and nuclear energy.