Markets
Will there be an Altcoin season in 2024? Expert analysis
Altcoin performance in 2024 has been a real headache for investors and enthusiasts. Although Bitcoin is nearing all-time highs and resurgence of meme pieces, retail interest in altcoins has been muted. Analyst Miles Deutscher sheds light on the potential reasons for this disconnect, offering valuable insights for navigating the current altcoin cycle. Is there still room for growth in this market?
Let’s look at Deutscher’s analysis to find out.
The Altcoin Market: A Sharp Contrast to 2021
Renowned analyst Miles Deutscher highlights significant challenges for the altcoin market in 2024, contrasting sharply with the bullish mood of 2021. Many altcoins are underperforming as the Bitcoin price fluctuates, with risks of further declines if the main support levels fail.
German government’s plan to sell for $3 billion Bitcoin caused market panic, although it did not have a major impact on Bitcoin’s daily trading volume. Altcoins like Injective, Stacks, Bunker, Arweave, and Celestia fell significantly, reflecting market weakness under Bitcoin’s dominance.
Flow of new tokens
Since April 2024, over a million new crypto tokens have been created, many of which are meme coins on the Solana network. Deutscher points out that the ease of creating new tokens has led to market saturation and dilution. He likens this influx of tokens to inflation, noting that each new token adds pressure to the market, thereby reducing the value of existing tokens.
Deutscher blames venture capitalists for contributing to market imbalances by planning their investments to maximize returns rather than supporting sustainable growth of projects. It explains how venture capital investments, combined with delays in project launches during bearish market conditions, contribute to token dilution and strain market liquidity.
This bias toward private markets creates barriers for retail investors, affecting market sentiment and participation.
How to survive a volatile market
Deutscher recommends focusing on high-quality projects with clear narratives, innovative tokenomics, and strong community support. Projects that stand out in sectors such as real-world assets (RWA), AI, and gaming will likely fare better amid market volatility.
Building strong communities and implementing effective tokenomics strategies, such as buybacks and staking, are key to maintaining long-term investor interest and mitigating market pressures.
On the positive side, Deutscher finds the real world assets (RWA) sector compelling and plans to accumulate ETH and other altcoins. He advises taking a medium to long term perspective (6-12 months or more) to withstand market volatility and using periods of low volatility to accumulate strong altcoins.
Bullish signs to watch for
Despite the current challenges, some investors are seeing bullish signals. Layah Heilpern highlights factors like Bitcoin and Ethereum ETF Approvals and support from high-profile figures, suggesting the market is ready for a significant move. Meanwhile, CryptoQuant CEO Ki Young Ju and technical analyst Mister Crypto see signs of an early altcoin season, with Ethereum’s MVRV ratio rising faster than Bitcoin’s, indicating a potential altcoin season. altcoin led by Ethereum given the current ETF situation.
Do you agree with Deutscher’s assessment of the altcoin market?