The sentiment around altcoins remains cautious. Despite Bitcoin nearing all-time highs and the resurgence of meme coins, retail interest in altcoins has been subdued. Here’s one analyst navigating the possible loopholes in the current altcoin cycle in 2024.
Renowned analyst Miles Deutscher highlights major challenges in the 2024 altcoin market, a stark contrast to the bullish mood of 2021. Many altcoins are underperforming as Bitcoin’s price fluctuates, with risks of further drops if key support levels fail.
The German government’s plan to sell $3 billion in Bitcoin caused market panic, though it hasn’t greatly affected Bitcoin’s daily trading volume. Altcoins like Injective, Stacks, Bunker, Arweave, and Celestia have fallen significantly, showing the overall market’s weakness influenced by Bitcoin’s dominance.
Proliferation of Crypto Tokens
Since April 2024, more than 1 million new crypto tokens have been created, many of them memecoins on the Solana network. Deutscher says this is because it’s easy to make new tokens, leading to market saturation and dilution. He compares this flood of new tokens to inflation, explaining that each new token adds more pressure on the market, making existing tokens less valuable.
Impact of Venture Capital
Deutscher criticizes venture capitalists for contributing to market imbalances by timing their investments to maximize returns rather than supporting sustainable project growth. He discusses how VC investments, coupled with delays in project launches during bearish market conditions, exacerbate token dilution and strain market liquidity. The skew towards private markets creates barriers for retail investors, impacting market sentiment and participation.
How to Navigate the Current Market
Deutscher recommends focusing on high-quality projects with clear narratives, innovative tokenomics, and strong community support. Projects that differentiate themselves in sectors like Real World Assets (RWA), AI, and gaming are likely to fare better amidst market volatility. Building robust communities and implementing effective tokenomics strategies, including buybacks and staking, are vital for sustaining long-term investor interest and mitigating market pressures.
On the flip side, analyst Miles Deutscher finds the Real World Assets (RWA) sector compelling, with plans to accumulate ETH and other altcoins. He recommends a medium to long-term perspective (6-12 months or more) for weathering market volatility and using low-volatility periods to accumulate strong altcoins.
Is Altcoin Season Incoming?
Despite the current challenges, some investors see bullish signals. Layah Heilpern points to factors like Bitcoin and Ethereum ETF approvals and endorsements from high-profile figures, suggesting the market is poised for a big move. Whereas, CryptoQuant CEO Ki Young Ju and technical analyst Mister Crypto see signs of an early altcoin season, with Ethereum’s MVRV ratio rising faster than Bitcoin’s, indicating a potential Ethereum-led altcoin season given the current ETF situation.
