Altcoin Market Faces Tough Correction Amid Crypto Consolidation

The cryptocurrency market is currently going through a phase of consolidation following a significant surge from October to March.

However, for investors in smaller digital assets, particularly altcoins, the landscape has turned challenging. While Bitcoin (BTC) and Ethereum (ETH) are holding relatively close to their yearly highs, other major cryptocurrencies like Solana (SOL) and Avalanche (AVAX) have experienced substantial declines of 40% to 50% from their peak values. Meanwhile, lesser-known tokens such as Sui (SUI) and Aptos (APT) have plummeted even further, dropping by a staggering 60% to 70%.

This correction in altcoins reflects a combination of factors. One significant issue is the increasing supply of tokens due to scheduled unlocks and ongoing distributions. Unlike traditional financial markets where ETF inflows provide a stable bid, the crypto space faces persistent selling pressure.

This pressure is notably coming from venture capital funds looking to capitalize on their early investments in various projects launched over recent years.

Additionally, liquidity inflows into crypto markets have stagnated, underscored by the decline in stablecoin balances on exchanges, which have reached their lowest levels since earlier this year. This decline limits the dry powder available for traders and investors, exacerbating the sell-offs in smaller tokens.

Adding to the market’s woes are seasonal trends, with historical data from TradingView indicating that June tends to be a challenging month for altcoins. Over the past six years, the aggregated market cap of cryptocurrencies excluding BTC and ETH, tracked by the TOTAL.3 metric, has consistently shown declines in June. This trend appears set to continue this year, with TOTAL.3 already down 11% to date.

In summary, while BTC and ETH maintain relatively strong positions, the broader crypto market, especially altcoins, is grappling with supply dynamics, diminished liquidity inflows, and seasonal headwinds, all contributing to the current downturn in these digital assets.

Source

Author

Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.