Q2 2025 has been a pivotal quarter for VC VentureX as we position our portfolio for the anticipated “Altcoin Supercycle.” We have proactively adjusted our holdings to align with emerging market trends that suggest altcoins are on the cusp of a significant rally. This investor brief outlines the strategic shifts we implemented, examines the macroeconomic backdrop and market signals informing our thesis, and details the key investment themes underpinning our conviction. Our goal is to provide a clear view of our rationale and how we are positioning the fund to capture the next phase of growth in the cryptocurrency market, all while maintaining a forward-looking and agile investment approach.
Strategic Portfolio Shifts
In anticipation of a broad altcoin rally, we rebalanced our portfolio in Q2 2025 increasing exposure to high-conviction altcoins and adjusting positions to optimize for risk-adjusted returns. Key portfolio changes this quarter include:
Ethereum (ETH): Significantly increased our position to capitalize on Ethereum’s central role in decentralized finance (DeFi) and its ongoing network upgrades (e.g. scalability improvements and Layer-2 adoption). ETH remains a core holding as a “platform” asset with broad utility and institutional recognition.
Litecoin (LTC): Initiated and accumulated LTC as a strategic hedge and to leverage its status as a proven “digital silver.” Litecoin’s reliability, upcoming protocol enhancements, and historical outperformance during crypto bull markets make it a valuable addition as we seek exposure to payment-focused altcoins.
Aave (AAVE): Added this DeFi blue-chip protocol token to our portfolio, reflecting confidence in the maturation of on-chain financial services. Aave’s strong market position in lending/borrowing, growing user base, and revenue generation from real usage align with our thesis that DeFi’s maturity will be a key driver in the coming cycle.
Bitcoin Cash (BCH): Accumulated BCH to capitalize on its undervaluation and potential resurgence as one of the major legacy altcoins during broad market rallies. We view BCH as a beneficiary of ecosystem growth and payment use-cases, with renewed developer activity and community support that could drive fresh interest as the overall market expands.
Sui (SUI) – Partial Exit: Took profit on a portion of our SUI position. Sui is an early-stage Layer-1 network we backed for its high-performance blockchain technology; however, given our current focus on liquidity and established network effects, we trimmed this position. This reallocation from a newer, speculative asset into more established altcoins was a risk-management decision. We remain positive on Sui’s technology long-term, but our priority this quarter was to streamline altcoin exposure toward assets we expect to move early in a supercycle scenario.
Portfolio Transaction Summary:
Ethereum (ETH): Additional purchase – 12,752 ETH
Litecoin (LTC): Additional purchase – 41,485 LTC
Aave (AAVE): New purchase – 54,268 AAVE
Bitcoin Cash (BCH): New purchase – 24,189 BCH
Sui (SUI): Partial sale – 1,958,945 SUI
These portfolio shifts reflect a deliberate rebalancing toward established, high-liquidity altcoins and DeFi leaders, while selectively managing exposure in emerging projects. This agility in repositioning ensures we capture upside from our highest-conviction themes and maintain flexibility to adjust as conditions evolve.
Macroeconomic & Market Context
The broader macroeconomic backdrop in 2025 is increasingly conducive to a crypto market resurgence. After a period of monetary tightening, major central banks have signaled a pause (and in some regions, a potential easing) of interest rate hikes, improving global liquidity conditions. Inflation has moderated in key economies, reducing uncertainty and encouraging a modest return to risk-on sentiment among investors. We are also now roughly one year past the latest Bitcoin halving (April 2024), an event that historically precedes multi-year bullish cycles in digital assets. At the same time, regulatory clarity around digital assets has gradually improved – for instance, the approval of multiple regulated crypto investment vehicles (such as Bitcoin ETFs in late 2024) has increased institutional participation. These factors contribute to a supportive macro backdrop for cryptocurrencies as we head into the second half of 2025.
Within the crypto market, Bitcoin has led a strong recovery over the past year, recently reaching multi-year highs in market capitalization and price. Bitcoin’s dominance – its share of total crypto market cap – has risen to the mid-60% range, reflecting a phase where capital has concentrated in the most established asset. Historically, such phases have preceded a broad rotation into altcoins once Bitcoin’s dominance peaks and starts to retreat. Meanwhile, the overall altcoin market capitalization remains significantly below its prior peak – roughly 40% below all-time highs as of this quarter – illustrating the room for a potential rebound. In other words, many altcoins have yet to reclaim their former valuations even as Bitcoin has surged, a gap that we believe will close as market momentum spreads outward.
Bitcoin Dominance Chart (2019–2025): Bitcoin’s market share (BTC.D) is at historically high levels (~60–65%, rightmost peak in chart). Previous peaks in dominance (green highlighted regions) have been followed by sharp declines, corresponding with capital rotating into altcoins.
For example, the chart above illustrates how Bitcoin’s dominance may be forming a potential peak pattern historically associated with subsequent altcoin outperformance. As Bitcoin’s dominance nears a cycle high and technical momentum shows signs of shifting, we anticipate a cyclical rotation of market leadership toward altcoins. This technical backdrop, combined with improving fundamentals across the crypto sector, bolsters our confidence that a significant altcoin cycle is imminent. In sum, the convergence of constructive macro conditions, Bitcoin’s maturity in this cycle, and the still-recovering state of alt markets reinforces our view that conditions are aligning for a robust altcoin-focused uptrend.
Rationale for an Altcoin Supercycle
Given the above context, we hold high conviction that the next phase of the crypto market will be an “altcoin supercycle” – a prolonged period of outsized performance by altcoins across the board. Several key factors underpin this outlook:
Cyclical Capital Rotation: Crypto markets have historically moved in cycles led by Bitcoin, with altcoins surging after Bitcoin’s major advances. As Bitcoin’s dominance reaches elevated levels, investors typically begin rotating into alternative assets seeking higher relative returns. We see clear parallels to past cycles: Bitcoin’s dominance is at or near a peak not seen since early 2021, and its eventual pullback could act as a catalyst for a broad altcoin rally (as was the case following Bitcoin’s dominance peaks in previous bull markets). This rotation effect is a cornerstone of our supercycle thesis.
Improved Altcoin Fundamentals: Unlike in prior cycles, many altcoin projects now have tangible fundamentals. Over the last few years, leading blockchain networks and decentralized applications have matured significantly. For example, Ethereum’s network is handling high volumes at lower cost due to Layer-2 scaling, DeFi protocols like Aave generate steady fees from real users, and new Layer-1 ecosystems (e.g. those we’ve monitored like Sui) have come online with innovations in throughput and security. This maturation means the next wave of investment will encounter a more robust, utility-rich altcoin landscape than ever before. In a supercycle, we expect quality projects with strong use-cases to be re-rated dramatically higher as the market recognizes their intrinsic value.
Attractive Valuations & Market Inefficiencies: The crypto bear market of 2022–2023 deeply corrected altcoin valuations. Even after recent stabilization, many established altcoins are still trading well below their historical highs or intrinsic valuations (based on metrics like network activity or cash flows in the case of revenue-generating protocols). This presents an attractive entry opportunity. We believe the market has yet to fully price in the technological progress made during the downturn. As optimism returns, price discovery can be swift. In a liquidity-rich environment, capital inflows could chase a relatively small pool of high-quality alt assets, leading to a compressed timeline of value realization – essentially the makings of a supercycle where prices accelerate rapidly.
Broader Adoption and Participation: Lastly, the crypto investor base has broadened considerably, which can amplify an altcoin supercycle. Retail participation is rebounding alongside institutional adoption (discussed further below). Crucially, institutions are no longer focusing solely on Bitcoin. The entry of traditional finance players into Ethereum, DeFi, and even select altcoins means there are new channels of capital ready to flow into this asset class. Additionally, mainstream awareness of cryptocurrency use-cases (from NFTs and gaming to Web3 social platforms) is much higher now than in previous cycles, potentially bringing more incremental buyers into altcoins during a frenzy. This broadened demand base could sustain an altcoin rally for longer and drive it higher than historical precedents.
Taken together, these factors form the basis of our conviction that a broad-based altcoin market upswing is on the horizon. The stage is set for a cycle in which alternative crypto assets, buoyed by both cyclical dynamics and structural improvements, deliver substantial gains.
Key Investment Themes and Insights
In forming our strategy, we have identified several key themes that reinforce our altcoin supercycle thesis. These insights – including perspectives from our global research, such as the detailed analysis shared by our team in Seoul – are guiding our portfolio positioning:
Bitcoin Dominance and Cycle Rotation: Bitcoin’s market dominance cycles remain a critical market signal. Historically, when Bitcoin’s dominance in total crypto market cap peaks at high levels (approximately 60–70%), it has often marked a turning point where capital rotates into altcoins. We observe that Bitcoin’s dominance is currently at a multi-year high with indications of topping out. This suggests that a phase of decentralized market leadership is approaching, in which a wide array of altcoins outperform as investors diversify beyond Bitcoin. Our portfolio tilt toward altcoins is directly informed by this observed cycle pattern.
Maturation of Decentralized Finance (DeFi): The DeFi sector has evolved from a speculative experiment into a stable, revenue-generating corner of the crypto economy. Over the past two years, leading DeFi protocols have improved security, compliance, and usability (for instance, better user interfaces and integration with traditional finance). This maturity is exemplified by platforms like Aave – now part of our holdings – which continue to attract users and liquidity due to their proven utility (permissionless lending, borrowing, and yield services). As DeFi protocols demonstrate resilience and efficient risk management (even under volatile market conditions), we anticipate renewed investor confidence in DeFi tokens. We expect DeFi to be a prominent theme in the coming altcoin supercycle, driven by both retail usage and institutional DeFi adoption (e.g. fintech firms and even banks leveraging DeFi platforms for yield or settlement).
Altcoin Ecosystem Growth: The broader altcoin ecosystem – encompassing smart contract platforms, Web3 applications, gaming, and beyond – has expanded markedly in both size and diversity. Developer activity on major Layer-1 networks (Ethereum, and newer entrants like Solana, Avalanche, etc.) is at all-time highs, and cross-chain development is fostering a more interconnected ecosystem. Importantly, user adoption metrics (daily active addresses, transaction volumes, etc.) on many networks have been climbing, reflecting real-world usage from decentralized exchanges to NFT marketplaces. This organic growth indicates a more resilient multi-chain environment where numerous projects can thrive in parallel. For VC VentureX, this trend reinforces the value of a diversified altcoin exposure. We are positioning to benefit not just from one or two “winners,” but from a rising tide that lifts a broad spectrum of high-quality alt assets as the ecosystem flourishes.
Layer-2 Scaling & Interoperability Innovations: Innovations in blockchain scalability and interoperability are reducing the barriers to wider crypto adoption. In particular, Ethereum’s Layer-2 networks (Optimistic rollups, ZK-rollups, etc.) have dramatically increased throughput and lowered transaction costs on the Ethereum platform, enabling more users to participate in DeFi, gaming, and other dApps without prohibitive fees. Similarly, interoperability protocols and cross-chain bridges are now more advanced, allowing value to move between different blockchains smoothly. These breakthroughs mean that the next influx of users and capital can be onboarded without the growing pains (congestion and high fees) that characterized the last bull run. We view tokens associated with successful Layer-2s and cross-chain ecosystems as attractive plays, and more broadly, we see these technologies catalyzing network effects that will boost altcoin valuations. In summary, improved infrastructure will likely amplify the scale and speed of an altcoin supercycle by making crypto networks more user-friendly and interoperable than ever before.
Rising Institutional Adoption: Institutional engagement with crypto is broadening beyond Bitcoin, which is a pivotal shift supporting the altcoin investment case. In recent months, several large traditional financial institutions and tech firms have made forays into altcoins and blockchain projects – from major banks exploring Ethereum-based settlement networks, to asset managers launching funds that include a basket of top altcoins. This growing institutional interest brings significant capital and expertise into the space, leading to greater liquidity and market stability across major alt assets. It also serves as a strong validation of the long-term viability of the crypto ecosystem beyond just Bitcoin. Notably, even within VC venture funding and enterprise adoption, we are seeing focus expand to areas like decentralized finance, Layer-2 solutions, and Web3 platforms (e.g. corporates issuing tokens or NFTs for customer engagement). All of these developments contribute to making the next market cycle more institutionally supported than any prior altcoin cycle. We expect that as institutions continue to allocate to assets like ETH and other protocol tokens, their participation will reinforce the momentum of an altcoin supercycle and potentially extend its duration through a “strong hands” effect.
Each of these themes strengthens our confidence in an approaching altcoin boom. They also guided our specific investment decisions in Q2 (for example, our AAVE purchase aligns with DeFi maturity, and our increased ETH position aligns with the Layer-2 growth narrative). By staying abreast of these trends, VC VentureX aims to remain ahead of the curve in capturing value from the evolving crypto landscape.
Looking Ahead
In summary, VC VentureX has positioned its Q2 2025 portfolio for the coming altcoin supercycle by aligning with key market trends and proactively shifting our strategy. We have increased exposure to high-potential altcoins (ETH, LTC, AAVE, BCH) and streamlined positions like SUI, all guided by a clear investment thesis: that altcoins are poised to enter a period of extraordinary growth on the back of favorable cyclical, fundamental, and adoption factors. The current macroeconomic and market context, from moderating inflation to peaking Bitcoin dominance, supports this view and underscores the timeliness of our positioning.
We maintain a formal yet optimistic outlook, confident that our portfolio adjustments and thematic focus will deliver strong results for our stakeholders. At the same time, we remain forward-looking and agile – continuously monitoring market signals and ready to adapt as new information emerges. This proactive posture is one of our core strengths in navigating the fast-changing crypto ecosystem. As we move into the next quarter, our team will stay vigilant in risk management while seeking out opportunities to capitalize on the altcoin supercycle thesis.
We appreciate the continued support and trust of our investors. VC VentureX is well-prepared for the road ahead, and we are excited about the potential in the coming months as we strive to generate outsized returns by anticipating and positioning for the next great trend in digital assets.