Why has Bitcoin skyrocketed to an all-time high while altcoins have failed to follow? The underlying reasons can be summarized in the following key factors:
Market Maturity and Investor Rationality:
With the continuous development of the crypto market, veteran players have become more rational and no longer blindly follow the fluctuations of altcoins.
Many investors' confidence in altcoins has plummeted, especially in the face of stagnant returns and an inability to break through the upward bottleneck, resulting in a large amount of hesitation and indifference.
Market Capitalization and Liquidity Dispersion:
Although the total market capitalization is continuously growing, the growth rate of altcoins lags far behind that of mainstream coins like Bitcoin.
As new projects continue to emerge, market liquidity has become increasingly dispersed, with most funds being siphoned off to mainstream projects, resulting in relatively weak trading volume and price performance for altcoins.
Institutional Participation and Compliance:
Institutional investors tend to invest in lower-risk, regulated mainstream coins like Bitcoin and Ethereum, while altcoins struggle to attract institutional funds due to unclear regulations and high volatility.
As the crypto market gradually becomes legalized, investors are more willing to invest their funds in assets with stronger compliance rather than high-risk altcoins.
Technical Factors and Ecosystem:
Mainstream coins like Ethereum and Bitcoin attract a large number of investors due to their strong technical support and comprehensive ecosystem.
In contrast, many altcoins lack innovation and competitiveness. Their technology and application scenarios cannot compete with mainstream projects, leading to a gradual decline in market interest.
Supply and Demand Relationship:
Bitcoin's supply is limited while demand continues to grow, driving its price upward.
The supply of altcoins is relatively large, and there is a lack of sufficient demand to support price increases, leading to price pressure and difficulty in breaking through bottlenecks.
Unlocking Peak Period and Selling Pressure:
The unlocking peak period of many altcoins is approaching, and the tokens of early investors and team members are gradually unlocking, bringing significant selling pressure to the market.
This selling pressure may lead to price volatility and exacerbate market instability, further suppressing the upward potential of altcoins.
Limited Speculative Hot Money:
Under the influence of the current AI wave and other traditional markets, speculative hot money is more inclined to flow into the stock market rather than the cryptocurrency market.
Confidence in emerging technologies and applications like Web3 has not yet been fully established, causing a significant amount of speculative funds to fail to flow into the altcoin market, leaving it without momentum.