Business
Challenges Faced by Altcoins in the Crypto Market
Explore the various challenges encountered by alternative cryptocurrencies (altcoins) in the dynamic and competitive crypto market, and discover how they navigate through the complexities to establish their presence and value.
Market Consolidation and Altcoin Correction
The cryptocurrency market is currently experiencing a period of consolidation following a significant rally from October to March. While major digital assets like Bitcoin (BTC) and Ethereum’s Ether (ETH) are only slightly below their yearly highs, smaller cryptocurrencies have faced a notable correction.
Challenges of Altcoins
Altcoins, which refer to cryptocurrencies beyond BTC and ETH, are facing challenges such as high dilution of token supplies due to unlocks and distributions scheduled for the future. This constant supply expansion can put downward pressure on prices and hinder price stability.
Selling Pressure and Venture Capital Influence
Venture capital funds realizing profits on their early investments in crypto projects contribute to significant selling pressure in the market. With billions invested in Q1 2022, these funds are now under pressure to return capital, impacting the overall market sentiment and liquidity.
Lack of Fresh Inflows and Seasonal Trends
Lack of fresh inflows into the crypto market and stalled liquidity, as shown by stablecoin market capitalization, have added to the challenges faced by altcoins. Additionally, seasonal trends, such as June being historically a downtrend month for altcoins, have further influenced market dynamics.