Why has Bitcoin soared to new historical highs while altcoins have not been able to keep up? The reasons can be summarized in the following key factors:
Market maturity and investor rationality:
As the cryptocurrency market continues to develop, 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 rising bottlenecks, resulting in a lot of wait-and-see and indifference.
Market capitalization and liquidity dispersion:
Although the overall market capitalization continues to grow, the growth rate of altcoins lags far behind that of mainstream cryptocurrencies like Bitcoin.
As new projects continue to emerge, market liquidity has become increasingly dispersed, with most funds being siphoned off by mainstream projects, leading to relatively weak trading volumes and price performance for altcoins.
Institutional participation and compliance:
Institutional investors tend to invest in lower-risk, regulated mainstream cryptocurrencies such as Bitcoin and Ethereum, while altcoins struggle to attract institutional funds due to unclear regulations and high volatility.
As the cryptocurrency market gradually becomes legalized, investors are more willing to invest funds in assets with stronger compliance rather than high-risk altcoins.
Technical factors and ecosystem:
Mainstream cryptocurrencies like Ethereum and Bitcoin attract a large number of investors due to their strong technical support and well-established ecosystems.
In contrast, many altcoins lack innovation and competitiveness; their technologies and application scenarios cannot compete with mainstream projects, leading to a gradual decline in market interest.
Supply and demand relationship:
The supply of Bitcoin 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 their price increases, resulting in price pressure and difficulty in breaking through bottlenecks.
Unlocking peaks and selling pressure:
The unlocking peak period for many altcoins is approaching, and the tokens of early investors and team members are beginning to be gradually unlocked, bringing significant selling pressure to the market.
This selling pressure may lead to price fluctuations and exacerbate market instability, further suppressing the upside potential of altcoins.
Limited speculative hot money:
Under the current influence of the 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 yet to be fully established, resulting in a lack of speculative capital flowing into the altcoin market, leaving it without momentum.