So much for 'Uptober.' Crypto markets will be recovering from this month's historic $20 billion wipeout for a long time.

By Frances Yue

Smaller cryptocurrencies are struggling to find their footing after a $20 billion wipeout

The market for altcoins has continued to struggle following the biggest liquidation event in crypto's history.

Heading into October, crypto investors were eager to see more gains. "Uptober," they were calling it.

But instead, the month has mostly been marked by losses following the biggest single-day liquidation event in the history of cryptocurrency, which wiped out at least $20 billion in positions. Almost two weeks later, the digital-asset market is still reeling.

See: Bitcoin rebounded after the biggest crypto liquidation in history. But a choppy road lies ahead for investors.

While bitcoin's (BTCUSD) price has stabilized, smaller coins are struggling to find their footing. The market capitalization of cryptocurrencies excluding bitcoin has fallen by over 18% since Oct. 10, according to data from TradingView.

The value of some smaller cryptocurrencies fell up to 90% in minutes during the crash earlier this month. A few tokens, such as Cosmos (ATOMUSD), saw their value nearly wiped out on Binance on Oct. 10, before bouncing back. Cosmo was trading at around $3.21 on Thursday, down 20% over the last month, and off 93% from its all-time high of $44.70 reached on Sept. 19, 2021, according to Dow Jones Market Data.

The liquidation event has continued to weigh on sentiment and may have a lasting impact, said Alex Thorn, head of firmwide research at Galaxy Digital. "If a broad altcoin rally is still in the cards, it will likely take weeks or months or longer to materialize."

Altcoins hit the hardest

The selloff on Oct. 10 was triggered by President Donald Trump's threatening of an additional 100% tariff against China, effective Nov. 1. But the liquidation was amplified by the limited liquidity of many cryptocurrencies, as well as infrastructure issues on some digital asset exchanges, said Martin Leinweber, director of digital asset research & strategy at benchmark administrator MarketVector Indexes.

Altcoins were hit much harder than bitcoin because of their thin liquidity, Leinweber said in a phone interview. Altcoins refer to cryptocurrencies other than bitcoin.

For now, only 16.5% of altcoins are currently outperforming bitcoin, Leinweber added.

Bitcoin has outperformed altcoins for over two years, noted Leinweber.

"We've always suspected that the altcoin market is driven by just a few market makers, versus in bitcoin, there are so many participants that are market making and providing liquidity in different ways," Shubh Varma, co-founder and chief executive at Hyblock Capital, said in an interview. Market makers are financial firms or individuals that provide liquidity by committing to buy and sell securities.

"There's always been this sort of suspicion that if these two, three market makers went away, there wouldn't be a lot of liquidity [for some altcoins]. And I think we kind of saw that being true," Varma said.

When looking at the order books for crypto, or a live list of all the buy and sell orders on Oct. 10, there was a drastic reduction in the liquidity once crypto prices started falling, Shubh said. As a result, even small trades could drive prices lower, he added.

Could altcoins recover?

It may take a while for altcoins to recover, Galaxy's Thorn said.

During the Oct. 10 selloff, a cohort of traders considered to be "sophisticated retail investors" was hurt the most, Thorn said in emailed comments shared with MarketWatch. This group was mostly made up of relatively wealthy crypto traders with blockchain experience and had the most enduring interest in altcoins, Thorn said.

These traders will "need to regroup and stabilize further before a material broad rally in altcoins is possible," he added.

Still, MarketVector Indexes' Leinweber said he is optimistic that the broader crypto market, including altcoins, could rebound, given the favorable macroeconomic environment. The Federal Reserve is widely expected to continue to cut its key interest rate, while the U.S. economy has remained resilient so far, he said.

"In general, most risk assets are performing well and the rate is expected to fall," Leinweber said. "Everything is on a green light here, but not crypto." As cryptocurrencies still trade mostly as risk assets, Leinweber said he expected them to eventually catch up.

Bitcoin (BTCUSD) rose 2.4% on Thursday to around $110,225, according to FactSet data. U.S. stocks traded higher on Thursday, with the Dow Jones Industrial Average DJIA up 0.3%. The S&P 500 SPX traded roughly 0.6% higher and the Nasdaq composite COMP rose 0.9%.

-Frances Yue

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10-23-25 1323ET