Many of the alts are not attempts at yet another currency ;)

Projects such as Sia (distributed storage) , NXT (asset exchange) and EOS (DAPP scaling) are great examples of "altcoin" blockchain projects which do not try to position themselves as "virtual currency".

So my answer? No, altcoins are most definitely not becoming obsolete as a whole :)

What you are seeing there are the healthy movements of a truly free market which are quite volatile due to the relative small size of the market, and the very short time that the market has existed.

I personally love all the red and start my day looking for buying opportunities during a pullback :)