In a recent video, Nicholas Merten of DataDash explored the troubled state of the altcoin market, questioning whether an altcoin season or super cycle was still possible. Through a detailed analysis of market trends and key cryptocurrencies, Merten highlighted the challenges altcoins faced and what investors needed to know.
Altcoin Rally: A Distant Prospect
Merten noted that the long-term trend for altcoins had been upward since 2018, with support levels holding firm. However, he observed that the likelihood of a significant rally, such as a 10x return, seemed increasingly unlikely given current market conditions. The resistance faced by altcoins, including critical moving averages, suggested potential risks for investors.
Overhyped Altcoins Facing Challenges
Solana (SOL)
Merten pointed out that Solana had shown resilience by bouncing back to its November 2021 highs in market capitalization. Despite this recovery, SOL had not reached its early 2022 peak levels. A key concern was the stagnation in stablecoin liquidity, which had not returned to 2021 levels and reflected limited new participation. This lack of liquidity and speculative trading could hinder Solana’s momentum.
Binance Coin (BNB)
For Binance Coin, Merten observed that the token had struggled since March, showing signs of distribution and lower lows. The stablecoin liquidity for Binance Smart Chain had flatlined at $5 billion, down from $13 billion. This stagnation indicated a lack of new user growth and liquidity, which could negatively impact BNB’s price and market stability.
Cardano (ADA)
Cardano faced challenges with a market cap much higher than its underlying dollar liquidity suggested. The network’s total value locked (TVL) had declined from its peak in late 2023, indicating reduced activity and adoption. With a current TVL of $13 million compared to a market cap of $12.5 billion, concerns arose about the platform’s ability to justify its high valuation in a slow-moving market.
Avalanche (AVAX)
Avalanche also showed weak performance, with its market cap dropping from $24 billion in March 2024 to $7 billion. Despite some recent gains, stablecoin liquidity had remained flat, failing to reach previous highs. This lack of liquidity and downward pressure suggested that Avalanche might struggle to regain its former highs or trigger a new altcoin cycle.
The Role of Bitcoin in the Altcoin Market
Merten highlighted that Bitcoin could potentially rescue altcoins. At the time, Bitcoin was hovering around a market cap of $1.4 trillion and facing resistance. For a robust altcoin cycle to emerge, Bitcoin needed to break and hold above $72,000.
A failure to maintain this level or a decline towards the 200-week moving average could significantly impact altcoins, potentially driving Bitcoin’s price down to $125 billion or even as low as $120–130 billion. In essence, Bitcoin’s strength could translate into gains for altcoins—if Bitcoin surged, so might they.
Hello Please Follow Me Back I have Followed You
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit