Altcoin Market is Going through a Challenging Process: Analysts List Their Reasons

While Bitcoin and Ethereum are going through a consolidation process, many altcoins are going through a difficult period.

Bitcoin and Ethereum prices are down approximately 15% from their peak levels this year. In altcoins such as Solana (SOL), Avalanche (AVAX), this rate increases to 40-50%; In Sui (SUI) and Aptos (APT), it increases to 60-70%.

Selling pressure does not end

Due to reasons such as unlocking and token distribution, there is a dilution effect on the supply of many altcoins. These tokens are available to early investors, ecosystem stakeholders, etc. It is opened for distribution.

For example, the market value of Arbitrum (ARB) increased from $1 billion to $2.5 billion due to the increase in supply. However, the ARB price fell to all-time lows in the meantime.

“Unlike stocks, which constantly see passive demand from ETF flows and share buybacks, cryptos, especially altcoins, are experiencing sustained selling pressure,” said Lekker Capital founder Quinn Thomson.

10x Research founder Markus Thielen said that venture capital funds invested $13 billion in the first quarter of 2022, but this money is now at risk as the artificial intelligence sector becomes popular.

No fresh money enters the market

The total market value of stablecoins such as Tether (USDT), Circle (USDC), First Digital (FDUSD) and Maker (DAI) has been drawing a horizontal graph since April.

David Shuttleworth, one of Anagram's partners, pointed out that the amount of stablecoins held on exchanges has decreased by $4 billion since February.

“This has particularly bad consequences for tokens that will unlock and airdrop large amounts of tokens,” Shuttleworth said.