StablecoinMarkets
|7 min ReadWhy L1 Chains Keep Losing The Cryptomoney Race To Bitcoin
Jax Morales
Senior Analyst
Published
Jan 16, 2026
The starting point for any honest look at “cryptomoney” is simple: almost all the serious capital in this market is chasing assets that either already function as money or might someday be treated that way. Total crypto capitalization sits in the low three trillion dollar range, and Bitcoin alone accounts for a bit more than half of that. Another big block, roughly eight hundred billion dollars, lives in alternative Layer 1 tokens like Ethereum, XRP, BNB and Solana. Add those buckets together and you get more than eighty percent of the space sitting in assets where investors are paying a monetary premium, not just discounting cash flows.
That framing matters because nothing moves token prices faster than changes in the market’s willingness to treat a coin as money. If you are allocating capital, building protocols or trading momentum, your real job is figuring out where that premium grows and where it leaks. Messari’s upcoming Crypto Theses 2026 argues that Bitcoin is still gaining ground on gold and other non sovereign stores of value. The open question is whether that rise lifts the rest of the L1 complex or quietly eats into their share of the “digital money” pie.
BTC Holds The Strongest Monetary Premium
Look at the L1 stack as it stands today and you see a classic power law. Ethereum, XRP, BNB and Solana together sit just under seven hundred billion dollars in value, more than eighty percent of the non Bitcoin L1 segment. After that, the curve falls off quickly. TRON’s token has a market cap in the mid twenties of billions. Beyond the top fifteen, all remaining L1s together add up to less than twenty billion.
On paper, those valuations are supposed to blend three ingredients: a monetary premium, the economic value of the activity that runs on chain, and the price of security that validators provide. In practice, the market has drifted toward treating most large L1s as if they were money first and businesses second. That implicitly benchmarks them to BTC, which lives almost entirely on its monetary narrative. Once you start using Bitcoin as the yardstick, it becomes clear how hard it is for anything else to keep up.
L1 Valuations Drift From Fundamentals
The revenue numbers tell the second part of the story. If investors were valuing L1s like high growth software, you would expect some rough relationship between fee income and market cap. Instead, a warped picture emerges. Aggregating all L1s with more than a billion dollars in value, headline price to sales multiples have hovered between roughly one hundred fifty and two hundred times in recent years. That already looks rich.
Once you strip out outliers like TRON and Hyperliquid, which generate a majority of the revenues in that group while making up only a tiny share of the total value, the underlying trend is more extreme. Adjusted price to sales ratios have exploded from around forty times in late 2021 to more than five hundred times on recent data. Over the same period, aggregate revenues for that L1 basket have generally moved in the wrong direction, falling sharply in three out of four years and dropping again on a current year run rate.
You can tell a generous story and say the market is discounting a huge rebound in activity. The problem is that the cash flow line does not justify that optimism. The simplest explanation is that investors are not paying for fees at all. They are paying for the idea that these tokens might behave like money, even if their underlying networks are not growing consistently.
That is exactly where Bitcoin has an advantage. BTC does not need a bustling application layer or fee expansion to defend its valuation. It just needs to hold its claim as the cleanest non sovereign store of value in the system. General purpose L1s do not have that luxury. If their usage and fee lines roll over, they lose the one economic edge they can point to when arguing for a monetary premium.
Performance Data Shows BTC Still Winning
Price performance since the end of 2022 makes the premium gap painfully clear. Take the top ten non Bitcoin L1s by market cap, remove obvious derivatives like HYPE, and compare them to BTC. Those tokens represent well over ninety percent of the L1 sector. Across that group, eight of the ten have lagged Bitcoin on an absolute basis. Six have underperformed by forty percent or more.
Only XRP and SOL show any edge. XRP’s outperformance is marginal and bound up with its own idiosyncratic flows. Solana is the true outlier. Since late 2022, Solana’s decentralized finance metrics have gone vertical. Total value locked is up close to thirty fold. Fees have jumped by nearly twenty times. Decentralized exchange volume is up more than thirty fold. Any way you slice it, the ecosystem has seen two to three thousand percent growth.
Yet SOL, the asset that is supposed to capture that explosion in activity, has only managed to beat BTC by less than a hundred percent in that window. In other words, an L1 needed parabolic fundamentals just to generate high double digit excess returns over Bitcoin. That is a brutal hurdle rate for every other chain that is not compounding at similar speed.
The deeper message is that the market’s conviction in L1 monetary stories is weakening. Investors are still willing to assign a premium when a platform is on fire and user numbers, fees and volumes are climbing together. Outside those rare bursts, they increasingly default back to Bitcoin as the safer monetary bet. Without ongoing growth, the premium leaks away and valuations compress relative to BTC.
What This Means For 2026 Positioning
Looking into 2026, Messari’s thesis is not that alternative L1s die. It is that, with a few exceptions, they continue to cede share of the “cryptomoney” narrative to Bitcoin. BTC’s own monetary case remains intact. The potential long term challenges around security budgets and fee markets are too distant and too uncertain to support a strong counter trade today.
For L1s, that means the burden of proof has flipped. It is no longer enough to say “we might be money one day” and hope a rising tide will carry valuations into the trillions. Investors now have a full cycle of evidence that L1 monetary premiums only hold when platforms are in an explosive growth phase. Once growth cools, these tokens trade more like high beta claims on Bitcoin than independent forms of money.
For traders and allocators, the implication is blunt. If you want cryptomoney exposure, BTC still looks like the benchmark and the primary place where the premium is durable. L1s can still deliver periods of spectacular outperformance, but history suggests those windows will be short, tied tightly to real usage explosions, and followed by long stretches of underperformance once the excitement fades.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.