On January 1, 2024, Bitcoin was trading at $43,000, with just 10 days left until the approval of the Bitcoin Spot ETF.

Then, on January 10, the Bitcoin Spot ETF officially launched. History was made.

What surprised many, including myself, was the overwhelming demand for these ETFs in the short term. Over the course of the year, more than $17 billion was invested in Bitcoin spot ETFs.

These positive inflows became the catalyst for a massive Bitcoin rally to new all-time highs (ATH) of $73,000, along with several other macro factors.

So, with Bitcoin reaching new ATHs, it would seem logical to expect that altcoins would also skyrocket, just like in 2021—right?

Not quite.

There are several reasons for this, and understanding them is crucial to answering the questions posed at the beginning of this discussion. Let’s break them down.

1. The primary driver of this cycle has been the Bitcoin ETF. This is vastly different from the previous cycle, where the main driver was macroeconomic conditions.

2. The dynamics of ETFs have completely changed the flow of liquidity. Since most of the new liquidity is now directed into ETFs, it doesn’t flow directly into altcoins, which has radically altered market dynamics this cycle.

3. Altcoin dispersion is greater than ever. The equation is simple: too many new launches, not enough fresh liquidity.

4. Retail traders were burned in 2022. This brings us back to the initial context of this discussion. 2022 dealt a heavy blow, both psychologically and reputationally.

5. There’s a lack of fundamental belief in crypto investing. In 2021, people invested for the long term, with genuine hope and excitement about the potential for this space and its technologies to change the world. Now, everything seems tired.

Most of the market participants today are seasoned veterans. There’s a growing mistrust towards altcoins, even toward project founders with good intentions—and who can blame them?