Horror crash: 115 altcoins fell an average of 50% from this year’s highs. Decipher the two major factors that hit the market in detail?

Reasons for this altcoin crash:

During a downturn in the altcoin market, effective risk management becomes the key to survival. Among them, token unlocking and poor liquidity indicators are generally considered to be the main triggers of this market crash.

Last week was extremely pivotal for the cryptocurrency space and was arguably the most notable week of 2024. During the week, cryptocurrencies, especially altcoins, experienced significant losses. The market cannot bear the pressure to unlock tokens totaling US$483 million, including US$97 million from Aptos, US$51 million from IMX, US$75 million from STRK, US$62 million from SEI, US$90 million from ARB, and US$18 million from APE US dollars and UNI's US$90 million. These early investors and venture capitalists appear to be under pressure to cash out, and these flows are weighing on Bitcoin.

In addition, Bitcoin miners began selling their inventory, and ETH balances on exchanges increased by $2.5 billion, which was related to potential selling pressure. Despite improving inflation data, Bitcoin ETFs saw significant net outflows, with approximately $660 million flowing out over five days. Overall net flows across segments were -$2.4 billion, marking the third weekly decline in net flows since the ETF launched in January 2024.

On May 8, 10x Research issued a warning stating, “Be wary of token unlocks. Are venture capital funds shortening the altcoin cycle?” Because in the next ten weeks, nearly $2 billion worth of tokens will be unlocked rapidly. This could further depress prices in the altcoin market. Their core view is that venture capital funds invested $13 billion in the first quarter of 2022, but then the market quickly entered a bear market. As artificial intelligence becomes a hotter investment area, these funds are now facing pressure from investors to return capital.

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