Remember when owning a few altcoins could make you wealthy after a bull market? Those days might be gone forever.
The cryptocurrency market has transformed dramatically, with the number of tokens exploding from 500 to a staggering 36.4 million. This fundamental shift is changing how crypto investors should approach the market.
An altseason is a period when altcoins outperform Bitcoin for an extended time. Historically, this has happened during every bull market, with investors flocking to alternative cryptocurrencies in search of higher returns.
But this cycle may be different, primarily due to the creation of tens of millions of altcoins.
In this article, we’ll explore why this matters, which projects can still thrive despite the oversupply, and how smart investors are adapting their strategies to navigate this new trend.
What is token oversupply in crypto?
Token oversupply in crypto refers to a situation where the number of cryptocurrencies and tokens in the market grows so large that investor capital is spread too thin. This can dilute demand, making it harder for individual tokens to gain traction, sustain value, or experience significant price increases.
The major side effect of this oversupply is a weaker Altcoin season. Too many tokens create uncertainty, making it harder to identify strong projects. In addition, many tokens are created for speculation or short-term profit, leading to rampant pump-and-dump schemes.
Platforms like Solana and meme-token launchpads (e.g., Pump.Fun) have made it easier than ever to create tokens, contributing to the oversupply. While some projects still succeed, investors need to be more selective than ever.
Has oversupply killed the altcoin season?
While many hope to capitalize on market enthusiasm by launching their own tokens, significant capital is required to drive prices higher.
With so many options competing for limited investment funds, it's becoming harder for projects to emerge as clear winners. The overwhelming number of choices leaves many investors uncertain about where to allocate their capital.
This massive token proliferation has created an entirely new landscape where traditional alt seasons may no longer function as they once did.
From 500 to 36.4 Million Tokens
The transformation of the altcoin market has been nothing short of remarkable. From 2013 to 2014, fewer than 500 tokens existed in the entire crypto ecosystem.
By the legendary bull run of 2017-2018, this number had grown to about 3,000 tokens, fueling explosive rallies where coins like Ethereum, XRP, and Litecoin posted record-breaking gains.
Fast-forward to today, and according to data from Dune Analytics, the market has over 36.4 million different altcoins.
The total altcoin market capitalization remained at $1,01 trillion as of 10 March, 2025.
Why traditional alt-seasons may be gone forever
The classic altcoin season—when nearly every non-Bitcoin cryptocurrency dramatically outperforms Bitcoin for months on end—appears to be fading into history. Let's examine why this change is happening and what it means for investors.
Supply exceeds demand
The basic economic principle is straightforward: when there are too many options chasing limited capital, not everything can win. Economist Alex Krüger explains this market reality clearly: "There are too many tokens. Infinite more to come. The supply of tokens is greater than demand."
This imbalance has created a situation in which the average altcoin's market capitalization has dropped by 42.7% since 2021. Simply put, there's only so much investment money to go around, and it's now spread across millions of tokens instead of thousands.
The Memecoin saturation problem
The market dilution problem is made worse by the proliferation of meme coins and low-quality tokens. Pseudonymous crypto trader Ash Crypto points to exchanges as part of the problem:
"Market is diluted [...] exchanges [are] only listing memes to grab volume and grow their user base. Retail buys these memes and [is] down 80% in a week and then quit."
This flood of meme tokens without solid fundamentals has created a situation where approximately 90% of newly listed tokens offer little beyond hype.
For new investors especially, this creates a minefield where making informed choices becomes nearly impossible.
Shortened season predictions
The days of multi-month altcoin rallies appear to be ending. Future alt seasons will be drastically shorter, lasting a few days to a few weeks at most. This represents a dramatic shift from the months-long rallies seen in previous cycles.
These compressed timeframes mean investors need to be much more nimble and ready to take profits quickly rather than expecting sustained upward movements across the altcoin market.
The "set and forget" approach that worked in 2017 or 2021 could lead to significant losses in the current environment.
Capital fragmentation effects
With investment capital now spread across millions of tokens instead of thousands, the concentration of funds needed to drive significant price movement has become much harder to achieve. This fragmentation will result in a harsh reality where only a few altcoin projects with strong use cases and narratives will survive.
Tangem tip: quality over quantity approach
Not all hope is lost for altcoin investors. The market's evolution demands a more selective, strategic approach rather than the "spray and pray" method that worked in previous cycles.
Smart money is shifting toward quality projects with fundamental value rather than chasing every new token listing.
The approach involves becoming more selective and focusing on projects with actual utility, strong teams, and real-world applications.
Here are four key strategies that are proving effective in dealing with the token flood:
Focus on utility tokens
Tokens that provide essential services to the crypto ecosystem generally offer more stability and long-term value.
These include platforms that facilitate decentralized applications, cross-chain interoperability, and financial services.
For example, while thousands of new tokens launch monthly on Ethereum and Solana, these foundation platforms themselves remain crucial infrastructure with growing adoption.
Tracking unlock calendars
One of the biggest pressures on token prices comes from new supply entering the market through scheduled unlocks. In 2025 alone, $74 billion in token unlocks are scheduled, including $17 billion in newly released tokens. These events can create significant downward pressure on prices.
Notable examples include Ripple's 400 million XRP unlock ($1.13 billion) and Sui Network's 64 million SUI release ($51 million) in February 2025.
Even smaller projects face similar dynamics, with Jito Labs (JTO) and Galxe (GAL) adding 11.3 million and 5.18 million tokens, respectively, to their circulating supply.
Staking yield assessment
With prolonged price appreciation less certain, yield generation has become a more important factor in token selection. Projects offering sustainable staking rewards provide a source of returns even when prices remain flat or decline.
The key is distinguishing between sustainable yields backed by actual network activity versus unsustainable marketing gimmicks that promise unrealistic returns.
Institutional partnership signals
Following smart money has always been a viable strategy in financial markets. In crypto, this translates to identifying which projects are gaining adoption from established financial and technology companies.
Only about 5–10% of altcoins will survive long-term, with those having institutional-grade infrastructure and regulatory clarity leading the pack.
This selective adoption by institutions contrasts sharply with the retail-driven enthusiasm of previous cycles that supported even lower-quality projects.
Final thoughts
The crypto market of 2025 bears little resemblance to the markets of 2017 or even 2021. With millions of tokens now competing for investor attention, the days when a rising tide lifted all boats appear to be over. The altcoin market has fundamentally changed, and investment strategies must be changed as well.
This doesn't mean the end of opportunity—just a transformation. The market is experiencing what traditional financial markets went through decades ago: a maturation process where speculation gradually gives way to fundamentals. What we're witnessing isn't the death of altcoins but rather a necessary evolution.
Store your altcoins safely in Tangem's EAL6+ certified, water, dust, and shock-resistant wallet with 25-year warranty protection—because long-term crypto success demands bulletproof security.
