Why altcoins are now in a difficult position

Winter for altcoins can drag on due to a bouquet of problems. These include low liquidity, the dominance of bitcoin and geopolitical instability

Some large altcoins have a growth potential, but the situation as a whole assumes that the difficult period is unlikely to end soon. We deal with three main reasons.

#1. Investors still ignore altcoins

According to Cryptoquant, the metric “Annual Cumulative difference in the volume of purchase/sale for altcoins” now is negative $ 36 billion and does not show signs of recovery. The indicator reflects the difference between the volume of applications for the purchase and sale of cryptocurrencies, with the exception of bitcoin. The current indicator means that over the past year, the volume of applications for the sale of altcoins by $ 36 billion exceeded the amount of purchase applications.

Investors sell altcoins more than they buy. This may be due to caution or the belief that altcoins are no longer attractive in the short term.

To confirm the beginning of the altcoin season, this indicator must begin to grow or become positive.

#2. Geopolitical tension enhances the dominance of bitcoin

Global geopolitical conflicts, such as the recent between Israel and Iran, create adverse conditions for altcoins. When Israel attacked Iran, the price of bitcoin fell, but altcoins lost even more. On the other hand, when the BTC grows, it attracts most of the attention and capital of investors. At the same time, altcoins remain in the shade. This trend has been preserved since the beginning of the year.

As a result, the dominance of bitcoin (BTC.D) is growing in both cases. In fact, BTC.D shows six green weekly candles in a row and lasts above 64%.

Some analysts believe that altsyzon could begin in June, if not for the conflict between Israel and Iran.

Current geopolitical conflicts are unlikely to be resolved in the near future. This means that cautious moods will probably continue to dominate the market, putting altcoins in a disadvantage.

#3. A record number of altcoins erodes the market

The third reason is a sharp increase in the number of altcoins. According to CoinmarketCap, by June their number exceeded 17.34 million. This is 850 times more than in December 2021. Meanwhile, the market capitalization of altcoins (Total2) is $ 1.13 trillion, which is 30% lower than the peak of the end of 2021.

Such explosive growth was created by an overly fragmented market. The influx of capital is reduced and distributed too subtly in many assets. Only a few large altcoins attract the attention of investors. Even if altsyzone comes, he will probably be selective. Coins such as Ethereum, Solana and XRP can win, but most small coins will face difficulties.

This reduces the chances of the success of new or less well -known projects and makes investors more careful when choosing assets for investments. Thus, even in the most optimistic scenario, most altcoins will remain in the tail.

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