Published on april 24, 2024, 12:57 pm
Image source: Fox News
```json [ { "TLDR": "Insufficient inflows into altcoins fail to offset selling pressure from substantial token unlocks by venture capitalists, posing challenges for long-term viability and pricing. High fully diluted valuations and early VC unlocking schedules lead to price declines for new tokens. Despite a 38% YTD increase in altcoin market cap, there is a lack of demand to absorb increased supply and selling pressure from VC unlocks. Concerns arise about the inability of existing liquidity to boost all major altcoins simultaneously, pointing towards a potential shift from the typical altcoin season pattern." } ] ```
Current inflows into altcoins are insufficient to offset some of the substantial token unlocks and selling pressure from venture capitalists (VCs). This trend poses challenges for the long-term viability and price trajectory of newly-issued cryptocurrencies. While VCs inject fresh liquidity into altcoin launches, they concurrently create substantial sell pressure that can undermine the token’s price stability over time, as highlighted by renowned crypto analyst Route 2 FI in an insightful Substack post dated April 22.
One of the primary concerns surrounding current token launches is the initial high fully diluted valuation (FDV) they carry. This valuation structure entices early adopters with significant airdrop allocations but entails sizable unlocking schedules for early VC backers. Consequently, this setup often results in a decline in prices for many new tokens, according to Route 2 FI.
As per TradingView data, the total market capitalization of altcoins (excluding Bitcoin) reached $1.05 trillion at the time of assessment, marking a 38% year-to-date increase from $760 billion at the start of 2024. The crux of the issue with substantial VC unlocks lies in the inadequacy of demand from crypto investors to absorb the heightened circulating supply and selling pressure emanating from these events, as emphasized by the anonymous analyst.
Traditionally, during previous market cycles, altcoins have experienced upward surges following Bitcoin’s ascension to new peaks, triggered by profits being cycled from Bitcoin into other digital assets. However, with an abundance of “300 decent projects,” existing liquidity may fall short in propelling all major altcoins together—a phenomenon that might signal a transformational shift away from the prevalent altcoin season pattern, cautioned Route 2 FI.
Original article posted by Fox News
