What is the future of altcoins?
As the opening of the A-share market tomorrow approaches, let us focus on the current situation of altcoins and the challenges they face:
If the A-share market ushers in a surge tomorrow, the altcoin funds in the currency circle will undoubtedly face the risk of being diverted, which is due to the market law.
Looking back at history, whether it is the comprehensive bull market in 2015 or the bull market of the Science and Technology Innovation Board in 2019, the performance of altcoins is relatively bleak.
When the Chinese stock market shows a money-making effect, the number of Chinese investors who originally invested in altcoins may decrease, and new investors will be more cautious. According to the data of the Universe Institute, Chinese-speaking customers still account for a considerable proportion, about 40-50%, and they are the main force in the market.
Driven by the money-making effect, some investors may choose to raise funds through channels such as Jiebei, Huabei, and Weilidai, and use capital allocation to enter the stock market. Compared with altcoins, Tugou coins, MEME coins, etc., the stock market is more convenient to enter and exit.
During the period when the A-share market rose, the myth of stock market wealth creation also emerged in an endless stream, and wealth growth from a few thousand yuan to tens of millions or hundreds of millions of yuan was not uncommon. These stories also happen outside the cryptocurrency world, but many people have not experienced them personally, but that doesn't mean they don't exist.
The rise of the U.S. stock market may boost altcoins to a certain extent because there is linkage between markets. However, the relationship between the Chinese stock market and altcoins is more like a one-way street, lacking a direct feedback mechanism.
When the market rises, there is often no shortage of funds. Chinese residents' deposits have doubled in eight years, and the M2 circulation volume is as high as 300 trillion. The market sentiment can turn from pessimism to optimism, from the trough to the peak, and all this can happen in an instant.
Therefore, altcoins are currently in a relatively embarrassing situation, with a dilemma. If investors cut their losses and enter the stock market, they may be stuck; if they continue to hold altcoins, they may miss the opportunity for the stock market to rise. Once the cryptocurrency market sees a surge, investors may cut their losses and return to the cryptocurrency market, but they may also be stuck again.
The above analysis is only for altcoins. For Bitcoin (BTC), its prospects are seen as an eternal bull market.
