Current landscape of the crypto market: Bitcoin dominance and the dilemma of altcoins
In the current cryptocurrency market, the funding for Bitcoin mainly relies on the injection of traditional large capital. When this capital enters the market, it usually drives the price of Bitcoin up and boosts the overall market sentiment. However, the situation for altcoins in the market is different; issues of oversupply and liquidity, along with excessive speculation on certain coins, have led to a weakening performance in the market. Recently, we have also seen many new coins listed on major exchanges experiencing significant pullbacks immediately upon listing, with almost no profit-making effect, indicating that the market's liquidity is gradually drying up.
If the price of Bitcoin experiences a pullback, the liquidity of funds in the market will further tighten. This also means that small coins on CEX platforms, especially those without support from large capital, will face greater risks. At this time, investors should pay more attention to risks rather than short-term gains.
Even if the price of Bitcoin continues to rise and breaks through $110,000, the performance of altcoins may still be sluggish. The key for small coins to rebound lies in whether they can attract off-market funds, or whether the funds previously trapped by large-cap coins like DOGE, XRP, and ETH can flow back into the altcoin market. Currently, unless these large-cap coins start to rise, the altcoin market is unlikely to receive substantial support. Furthermore, regarding the 'wealth creation effect' on-chain, although the opportunities seem tempting, their high-risk nature and rapid changes are not suitable for all investors. Many participants lack sufficient time and expertise to cope with the intense competition in the market.
From the current market environment, the focus should be on the price trend of Bitcoin. Investors need to pay attention to when Bitcoin will pull back, as changes in Bitcoin's price directly affect market liquidity and the flow of funds. For altcoins, it is currently more suitable to patiently wait for opportunities after the market downturn before deciding whether to participate.
During the pullback of Bitcoin, ETH, as the second-largest market cap coin, may perform relatively strong. Although the market's focus is usually on Bitcoin, ETH, with its solid technical foundation and wide application scenarios (such as DeFi, NFTs, etc.), may experience a strong rebound during Bitcoin's adjustment. More importantly, ETH's value has also gained widespread recognition, including from traditional capital, particularly in the portfolios of some well-known institutions, where the proportion of ETH is often significant.
Overall, the most important thing in the current market is to remain vigilant about the trend of Bitcoin and to enter the market at the right time during its price adjustments. Although the altcoin market is full of opportunities, the current lack of liquidity requires investors to be more cautious. As an important asset in the market, ETH may show relative strength in the future and is worth paying attention to by investors.
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