Concerns swirl among investors as cryptocurrency markets navigate a recalibration period, causing shaking confidence within certain sectors of the crypto community. The leading cryptocurrency, Bitcoin, has seen its price plummet, inadvertently pulling down other digital currencies dubbed ‘altcoins’ in its wake, creating an atmosphere teeming with unease.
Maneuvering around the hurdles, market analysts and traders offer reassurances. Market dips and peaks, they argue, are merely a part and parcel of the financial journey. Optimistically, some proponents prompt the community to keep their sights set on the broader perspective. Within context, altcoins have demonstrated their resiliency, holding steady above levels that haven’t been witnessed in several years.
Altcoin Sherpa, a prominent voice in the crypto analyst community, has shared his insights into this matter, discreetly dissecting the discrepancies as well as the factors that contribute to differentiate this bull run cycle from its 2020 predecessor.
Through a post, Altcoin Sherpa portends a cooling-off period for altcoins, predicting that altcoins will presumably take a sabbatical for one to four months. The analyst believes the market needs some respite, a period of consolidation after this tumultuous streak.
Mirroring this conception, though altcoins surprisingly slipped beneath the $1 trillion market capitalization, they still had an impressive performance over the past few months. In 2024 alone, market data from TradingView indicated that cryptocurrency market caps, excluding Bitcoin, have surged by 22.79%. Supplemented by a 91.31% and 52.46% rise in just six months and one year, respectively, the “big run” that Sherpa references has catapulted the cryptocurrency market back to figures reminiscent of those from 2022.
Highlighting a concern, Sherpa notices that despite promising performance rates, many altcoins haven’t experienced the expected exponential run in the last few months. Chainlink’s native token, LINK, serves as a prime example. LINK investors have managed a 3-4x return, following more than 500 days of gathering, but are now experiencing a significant pullback.
A contributing factor to the mixed sentiment is the inflated anticipation for altcoin performance during this cycle. An exchange with Sherpa on an online platform encapsulated this phenomenon when a user commented on the underperformance of LINK despite being hyped as a potential windfall. Sherpa humorously conveyed his own disappointment, to which the user playfully concluded that shiny new coins might be the safer gamble.
This banter underscores a evolution since the 2020 bull run: investors face the new challenge of selecting the fittest altcoin among a pool that has significantly deepened. Sherpa proffers a strategy, advocating for careful and shrewd selection of altcoins likely to experience strong upward momentum. He compares this complexity to the 2020 altseason when practically every altcoin concurrently surged.
The market’s liquidity is more dispersed currently, with a select few sectors making significant gains, specifically artificial intelligence and meme-focused altcoins. Layer-1 (L1) tokens such as SEI have also shown strong performance. For the remaining majority, however, the returns are below par.
Amid an abundance of digital tokens, both veterans and newcomers are vying for attention, creating a challenging atmosphere to capture investors’ mindshare.
Sherpa predicted a “generally bearish” environment persisting, with user attention becoming increasingly challenging to maintain and the surging hurdles faced by projects to cultivate a strong user and community base. The analyst ends on an encouraging note, recommending investors shift their attention to “real value” altcoins, such as Ethereum (ETH) and Solana (SOL), asserting that this run is still far from its finish line.
While the turbulence continues to buffet the cryptocurrency markets, the analyst’s Colosseum of gladiators continues to sway, reminding investors that a portfolio rebalancing act might prove necessary among altcoins holding steady at $981 billion in market capitalisation in the weekly chart.
