In the cryptocurrency market, many people may wonder why the altcoin bull season like that of 2021 has not reappeared. Here are some key factors to understand:
Why hasn't there been a universal rise in altcoins like in 2021?
The universal rise of altcoins in 2021 was mainly due to the Federal Reserve's loose monetary policy, with hot money flooding into the market, driving rapid growth in the overall cryptocurrency market. Now, we are in a transitional period of interest rate hikes and balance sheet reduction. Although market sentiment has improved, the release of large-scale funds still takes time. Therefore, the current market is still in an adjustment period, especially in the context of the interest rate hike cycle just beginning.
It should be noted that the altcoin market in 2021 did not remain in a state of universal growth throughout the year. In fact, the universal rise of altcoins mainly occurred in the first half of the year, while in the second half, the flow of market funds began to concentrate more on popular sectors, such as public chains, DeFi, and NFTs, while the performance of other altcoins was relatively flat. Therefore, selecting quality projects and sectors became particularly important.
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How to select potential altcoin projects?
Choosing a quality altcoin project is not an easy task. Even within the same sector, different projects may perform vastly differently. For example, in the MEME coin space, although Pepe, Doge, and Floki are all well-established MEME coins, their price increases vary greatly. Why is that?
Several key factors determine the performance of these altcoins:
Narrative
For example, Dogecoin gained a lot of traffic and funding support due to Elon Musk's Twitter effect, which also enhanced the atmosphere of market speculation and drove up its price. A good narrative can attract investors' attention and promote project growth.
Community and team operations
A strong community and an active team can effectively promote a project's visibility and user engagement. For example, after Floki was listed on Binance, it quickly expanded to other platforms (such as Coinbase, Bithumb, Upbit, etc.), driving the influx of traffic and funds through increased platform listings and trading pairs.
Support from market makers
Projects with strong support from market makers are more likely to gain price support and liquidity in the market. These market makers can inject funds into the project at key moments, ensuring price stability and increasing market recognition.
Summary
Whether it is MEME coins, gaming coins, public chain projects, or DeFi tokens, the final price increase and market performance are inseparable from traffic and funding support. When selecting projects, in addition to focusing on their technology and market prospects, it is also important to analyze whether the project has a good narrative, strong community support, and the power of market makers. Only with these factors can a project's valuation and price increase be genuinely enhanced.
Overall, the altcoin market in 2024 is still full of opportunities, but we also need to be more cautious and wise in selecting quality projects, avoiding blindly following trends, and practicing rational investment.
