This Is The Biggest Issue With Altcoins This Cycle: Crypto Analyst
19 Juin 2024 - 8:30AM
NEWSBTC
In a thread on X, Miles Deutscher, a renowned figure in the crypto
analysis sector, has dissected what he views as a critical flaw in
the current altcoin market. Addressing his extensive following,
Deutscher elaborated on the impact of the rapid increase in the
number of new crypto tokens, an issue he believes to be at the core
of the altcoins’ underperformance in this cycle. The Proliferation
Of Crypto Since April 2024, the crypto landscape has witnessed the
introduction of over 1 million new crypto tokens, with a notable
half of these being memecoins created primarily on the Solana
network. According to Deutscher, the ease of deploying these tokens
on-chain contributes to an inflated token count but highlights a
deeper issue of market saturation and dilution. Deutscher
elaborates, “We now have 5.7 times the amount of crypto tokens than
we did during peak bull in 2021. This is a major reason why crypto
has been struggling this year, despite Bitcoin hitting new all-time
highs.” He likens the excessive issuance of new tokens to
inflation, where “the more tokens that launch, the more cumulative
supply pressure on the market.” Related Reading: Expert Forecasts
Altcoin Market Crash, Suggests Optimal Buy-In Points For Top 10
Cryptos The analyst also sheds light on the dynamics of venture
capital (VC) investments in the crypto space, noting the largest
quarter for VC funding peaked at $12 billion in Q1 2022, just as
the market began to turn bearish. Deutscher criticizes the timing
and strategy of VCs, suggesting that while their capital injection
is essential for project development, it often leads to market
imbalances. “VCs, like retail investors, are opportunists. Their
investment timing often aims to maximize returns rather than
support sustainable project growth, contributing to cyclical peaks
and troughs in the market,” Deutscher explains. He continues to
discuss the subsequent market effects, where projects delay
launches in unfavorable conditions, only to flood the market when
sentiment turns, worsening the dilution. The constant introduction
of new tokens not only strains the market’s liquidity but also
affects investor confidence, especially among retail investors.
Deutscher emphasizes, “The skew towards private markets is one of
the biggest and most damaging issues in crypto, especially compared
to other markets like equities and real estate.” Related Reading:
Flocka Fiasco: Waka Flocka Flame’s Crypto Launch Crashes Into
Insider Trading Scandal This environment creates a barrier to entry
for new liquidity and leaves retail investors feeling sidelined, a
sentiment exacerbated by high-profile failures like LUNA and FTX.
Deutscher argues, “If retail investors feel like they can’t win,
they won’t play the game, which is why memes have dominated this
year—it’s the only meta where retail feels like they have a
fighting chance.” Looking forward, Deutscher proposes several
strategies to mitigate these issues. Exchanges could enforce better
token distribution standards and prioritize larger community
allocations. Additionally, adjusting the percentage of tokens
unlocked at launch could help manage sell pressure more
effectively. “Even if the insiders don’t enforce change, the market
eventually will,” Deutscher asserts. He suggests that exchanges
should adopt rigorous standards for listing new projects and be
equally stringent about delisting those that fail to meet ongoing
criteria, thus preserving market integrity and liquidity. In his
closing remarks, Miles Deutscher hopes his insights will foster
better understanding and prompt a reevaluation of current
practices. “Dispersion isn’t the only problem, but it certainly is
a major one—and something that needs to be discussed more openly to
foster a healthier crypto ecosystem.” At press time, Ethereum (ETH)
traded at $3,562. Featured image from Shutterstock, chart from
TradingView.com
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