Altcoins Face Challenges: Regulatory Issues and Liquidity Constraints Hamper Uptober Progress

Despite the buzz around Uptober, altcoins have remained largely stagnant as traders contend with shrinking liquidity and shifting regulatory conditions. Although

ETF products have attracted $1.7 billion in new capital over just four days—including $553 million on September 12 alone—altcoins have failed to ride this wave. The disparity is clear: (ETH) is trading close to $4,287, while DeFi platforms such as Mutuum Finance (MUTM) are experiencing liquidity challenges. Experts point to a mix of regulatory ambiguity and limited capital as the main reasons for this stagnation, with many investors opting for established assets instead of riskier altcoins.

Recent regulatory shifts in the U.S. and EU have added more uncertainty for altcoins. The U.S. enacted the GENIUS Act in July 2025, introducing strict reserve rules for stablecoins and barring the Federal Reserve from launching a CBDC without Congress’s approval. Meanwhile, the EU’s Markets in Crypto-Assets (MiCA) regulation, fully in effect since late 2024, requires crypto service providers to obtain licenses, ensure transparency, and maintain capital reserves. These rules, intended to reduce systemic risks and fraud, have increased compliance burdens for smaller projects, prompting some to relocate to more accommodating regions like Singapore and the UAE.

Investors are also cautious about the CLARITY Act, which aims to define the regulatory boundaries between the SEC and CFTC but remains stalled in the Senate. The lack of progress has left legal uncertainties, discouraging institutional investment in altcoins. At the same time, the U.S. Treasury’s resistance to a retail CBDC and its advocacy for a Bitcoin strategic reserve reflect a dual approach: encouraging crypto adoption while enforcing measures to prevent excessive speculation.

Analysts believe that for altcoins to rebound, both liquidity and regulatory issues must be addressed. For projects like MUTM, success depends on proving real-world value—such as through its Layer-2 lending system and staking incentives—while adapting to stricter compliance standards. Still, the overall market remains hesitant. With

below $4,500 and most ETF inflows focused on BTC, altcoins are left vying for a diminishing pool of risk-seeking capital. As one expert put it, “The Uptober story is still going, but altcoins need more than just excitement—they require liquidity, regulatory certainty, and strong fundamentals to inspire confidence.”