Crypto analyst highlights ‘major fundamental flaw’ causing altcoins to outperform this cycle
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Crypto analyst Miles Deutscher recently highlighted a “major fundamental flaw” that he believes is the primary reason behind altcoins’ underperformance in the current market cycle. Deutscher detailed his findings in an X (formerly Twitter) thread on June 18. According to the analyst, the issue stems from the unprecedented amount of venture capital (VC) funding that poured into the crypto space in 2021 and recently flooded the market again. The objective of this thread is to give you more insight into crypto’s biggest issue. It will explain exactly how we got here, why prices are behaving the way they are, and the path forward. — Miles Deutscher (@milesdeutscher) June 18, 2024 However, the influx of VC funding also coincided with a significant increase in the number of new crypto projects. Deutscher pointed out that “the total crypto token count tripl[ed] between 2021-2022.” The bear market that followed saw many of these projects delay their launches. “Launching a project in the midst of a bear is a death sentence,” Deutscher explained. Consequently, when the market finally rebounded in Q4 2023, these delayed projects, along with many new ones, flooded the market. Too many altcoins dilute retail’s attention Deutscher’s report shows that “over 1 million new crypto tokens have been launched since April alone.” This massive influx of new tokens has led to what he calls “altcoin dispersion,” which he likens to inflation in the traditional economy. New Tokens by Blockchain. Source: Dune / Miles Deutscher “If you print more tokens, this, in turn, reduces crypto’s purchasing power relative to other currencies (like USD),” Deutscher stated. He estimates that there is currently “around $150m-$200m of new supply pressure per day” due to token unlocks and new launches. This constant sell pressure, combined with a lack of new liquidity entering the market, has led…
Filed under: News - @ June 18, 2024 8:18 pm