Kevin O’Leary is sounding an alarm for the crypto world, but it isn’t about price volatility or market sentiment.
His warning targets the very structure of the industry itself. In his view, the regulatory transformation underway in the United States is about to redraw the map — and the vast majority of altcoins won’t be part of the future.
Key Takeaways
Kevin O’Leary says new U.S. regulations will push the crypto market toward a Bitcoin-and-Ethereum-only future.
He expects a major “cleansing” that will wipe out most altcoins lacking real utility.
Institutions will allocate mainly to BTC and ETH, leaving little room for smaller assets.
A Market Being Rebuilt From the Top Down
Instead of focusing on speculative mania or technological innovation, O’Leary is looking squarely at lawmakers and regulators.
He argues that Washington’s overhaul of digital-asset rules is pushing the industry toward a model dominated almost exclusively by Bitcoin and Ethereum, with very little room for the thousands of smaller coins that filled the previous cycle.
The investor claims that the clarity emerging around digital assets, derivatives, and settlement structures is reshaping market incentives faster than most participants realize.
In his view, every new rule pushes institutions closer to the two assets they already trust — and pushes everything else further into irrelevance.
Regulatory Milestones Driving the Shift
O’Leary highlights two major pillars of that transformation.
First, he says the CFTC’s evolving oversight is only a fraction complete — roughly 30% of the intended framework, by his estimate — yet the direction is already unmistakable.
Second, he points to new legislation such as the Genius Act, which he believes has triggered a turning point in the stablecoin market.
Under these rules, stablecoins backed by short-term U.S. Treasuries are becoming a standardized digital representation of cash. Once these instruments gained regulatory legitimacy, O’Leary says Bitcoin immediately lost part of its utility as a payments asset. He notes that one of the first major market pullbacks arrived shortly after stablecoin rules tightened.
The Clarity Act and the Institutional Floodgate
Another bill on O’Leary’s radar — the Clarity Act — is expected in early 2025.
He predicts this legislation will finally give institutions the green light to expand into digital assets at scale. But their entry, he warns, will be highly selective.
Large funds, in his view, will overwhelmingly concentrate on Bitcoin and Ethereum, allocating 3% to 5% of their portfolios to the pair.
That concentration, he says, will crowd out nearly all competing tokens.
His argument is simple: to capture approximately 90% of crypto’s total market performance, institutions only need the two largest assets. Everything else becomes noise.
Altcoins Face a Test Few Will Pass
O’Leary describes the coming phase as a “cleansing,” one that could eliminate hundreds of projects that lack real-world utility or fail to maintain major marketing budgets.
This isn’t merely theoretical — he points to the last eight weeks of market data, where portfolios containing only Bitcoin and Ethereum significantly outperformed those diversified into altcoins.
To survive, O’Leary says, alternative tokens must offer genuine usage and the financial power to stay visible in an increasingly regulated environment. Without both, most will fade as capital rotates toward the assets institutions favor.
