#Write2earn
Altcoin Market Struggles: Key Reasons for Price Drops
#Altcoins #TOTAL3 #Solana #avalanche
The altcoin market is facing significant challenges due to several factors:
Price Decline and Comparison to BTC/ETH
While Bitcoin (BTC) and Ethereum (ETH) have dipped 15% from their yearly highs, smaller cryptocurrencies like Solana (SOL) and Avalanche (AVAX) are down 40-50%. Layer-1 challengers such as Sui (SUI) and Aptos (APT) have dropped 60-70%.
High Dilution of Altcoins
Altcoins suffer from constant token supply dilution through scheduled unlocks and distributions. For example, Arbitrum (ARB) nears its all-time low despite rising market capitalization due to increased supply. Solana’s daily supply inflates by 75,000 tokens, adding roughly $10 million in value at current prices.
Selling Pressure from Venture Funds
Venture capital funds are creating selling pressure by cashing out early investments, especially in the current bear market. Markus Thielen of 10x Research noted that venture funds invested $13 billion in Q1 2022 but now face pressure to return capital as AI gains popularity.
Lack of Fresh Inflows
New liquidity inflows into crypto markets have stagnated. Since April, stablecoin balances on exchanges, representing available capital for trading, have decreased by $4 billion, the lowest since February. This lack of demand worsens the impact of large upcoming token unlocks and new airdrop programs.
Seasonal Trends and Market Sentiment
Historically, June has been a down month for altcoins, with market cap data excluding BTC and ETH showing a decline each June over the past six years. This trend continues, with an 11% drop so far this month.
