Markets
Should You Ditch Altcoins? Token unlocks and VC sales raise red flags
Things are getting seriously turbulent in the markets!
After a stellar run from October to March, the crypto market went through a difficult phase. While Bitcoin and Ethereum are weathering the storm somewhat, smaller altcoins are plummeting. Sentiment in online forums is worsening, with many altcoin prices plummeting. But is this just a temporary correction or the start of a long-term decline for altcoins?
Dive deeper to get the inside scoop on the altcoin market and what it means for your investments.
Altcoins in danger
Bitcoin and Ethereum are currently trading just 15% below their yearly highs. On the other hand, major altcoins like Solana and Avalanche have plummeted 40% to 50% from their March peaks. Layer 1 tokens like SUI and Aptos saw even steeper drops, falling 60% to 70%. Experts attribute this sharp decline to token unlocking, venture capital sales, and a lack of new capital entering the market.
Token Supply Challenges
One of the main challenges for altcoins is the continued increase in token supply due to scheduled unlocks. For example, Solana’s daily token supply increases by 74,000 tokens, equivalent to about $10 million at current prices. This influx of tokens, combined with the sale of their initial investments by venture capital firms, is putting downward pressure on prices.
Stagnant Crypto Liquidity Flows
Adding to the problems is the stagnation of liquidity flow in the crypto market. The stablecoin’s market capitalization increased by $30 billion earlier this year but has remained stable since April. This indicates reduced trading activity and a decline in investor interest across the world. stable coins such as USDT, USDC, FDUSD and DAI.
Market capitalization fluctuations
Looking at the combined market capitalization excluding Bitcoin and Ethereum, June continues to be a challenging month for altcoins in 2024. As of June 22, 2024, the aggregate market capitalization was $594.967 billion, reflecting a significant drop from 14 .30% in just one month. This is in stark contrast to the peak of $706.676 billion in early June and the year’s high of $775.36 billion on March 31.
As the cryptocurrency market consolidates, smaller altcoins are facing unprecedented challenges.
Thinking about buying altcoins or waiting for clearer skies? Let us know your strategy!
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