Understanding the Recent Decline in Altcoins
Over the past week, the cryptocurrency market has experienced a significant decline, with over $150 billion leaving the space, predominantly from low-cap digital assets. This downward trend in altcoins has been ongoing for several months, as noted by the chief analyst at Real Vision, Jamie Coutts.
- Coutts highlighted that smaller cap crypto assets have been facing challenges since the peak in March this year.
- Furthermore, he pointed out that the Top 200 equal weight index has dropped by 33% compared to the Market Cap index, which saw a decrease of around 12% over the last three months.
Where is the Altseason?
Analysis by Coutts revealed sector-specific declines, with infrastructure and applications dipping by approximately 40%, while smart contract, currency, and DeFi assets experienced reductions of over 30% since March. The analyst suggested that if this current phase represents a typical mid-cycle correction, opportunities may arise in mid and small-cap assets once the market stabilizes.
Market Sentiment and Altcoin Performance
Financial platform Bankless commented on the ongoing bearish sentiment in altcoins, stating that despite signs of decreasing inflation levels in the US, altcoins have continued their steep downward trajectory. They highlighted that 70 of the top 100 tokens have seen declines exceeding 10% in the past week, with 20 of them dropping by over 20%.
- The cryptocurrency market as a whole has witnessed an 11.5% decrease since reaching its peak total capitalization of $2.89 trillion in mid-March.
The Normalcy of Altcoin Decline
Crypto market analyst ‘Jelle’ reflected on the current market dynamics, noting that while Bitcoin is only 9% away from its all-time high, altcoins are down by approximately 70%. Despite this significant gap, ‘Jelle’ emphasized that such disparities are common in the crypto space. They predicted that once Bitcoin starts a new price discovery phase, altcoins are likely to experience a substantial rally.
- Jelle elaborated on the traditional pattern where Bitcoin leads the market, with altcoins following suit, similar to the trend observed in 2020.
Expert Predictions and Analysis
Another analyst, ‘Moustache,’ presented a pessimistic view on altcoins, pointing out that they have been in a declining phase since the previous market cycle peak in 2021. According to Moustache, altcoins are unlikely to gain significant traction until Bitcoin breaks out of its current range-bound trading pattern, established since early March.
Hot Take: Deciphering the Altcoin Downtrend
The recent slump in altcoin values reflects ongoing market challenges, with smaller cap digital assets bearing the brunt of the downturn. Despite these setbacks, analysts anticipate potential opportunities in mid and small-cap assets once market conditions stabilize. The market sentiment remains bearish, with altcoins facing significant sell-offs and a lack of appreciation until Bitcoin initiates a breakthrough from its current trading range.
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