Crypto analyst Willy Woo has provided a detailed explanation for the stark underperformance of altcoins relative to Bitcoin in the 2023-2025 market cycle, attributing it directly to the fallout from the FTX collapse in 2022. According to Woo, the bankruptcy administrators liquidated massive amounts of locked Solana (SOL) tokens through off-chain legal agreements, selling them at discounts exceeding 60% to hedge funds like Galaxy Digital and Pantera.
These funds then hedged their exposure by shorting SOL futures, creating synthetic sell pressure in the market. This mechanism allowed the funds to capture a near risk-free return of 70–80%, combining staking yields, basis yields, and the deep token discount. Retail investors, unaware of these off-chain sales, bought altcoins at elevated prices and absorbed the resulting losses.
While Bitcoin surged over 400% to around $88,000 by late 2025, with its dominance climbing to between 55% and 60%, most altcoins remained largely flat. Woo noted this pattern was not isolated to Solana, suggesting similar arrangements spread across the ecosystem where project backers sold locked tokens to hedge funds, who then offloaded risk via futures markets.
Woo offered a cautious silver lining, stating that many tokens appearing locked on paper have already been sold off-chain, which could reduce future selling pressure and create opportunities for altcoin recovery. However, his current advice to investors is straightforward: "just buy Bitcoin." Investor and FTX creditor Simon Dixon echoed this sentiment, criticizing the FTX Chapter 11 process as a wealth transfer benefiting a select financial club while lawyers drained value meant for creditors.
Current market data shows Bitcoin trading around $71,285, while the Altcoin Season Index sits at approximately 48, well below the 75 threshold needed to confirm a genuine altcoin season. The total altcoin market cap remains below its January highs of around $1.3 trillion.
