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In his latest video, Nicholas Merten of DataDash discussed the troubling state of the altcoin market, exploring whether an altcoin season or super cycle is still on the horizon. Through a detailed analysis of market trends and key cryptocurrencies, he sheds light on the challenges facing altcoins and what investors should know.
Altcoins Rally Not in Sight!
Merten highlights that the long-term trend for altcoins has been upward since 2018, with support levels holding up. However, he notes that the potential for a significant rally (like a 10x return) appears increasingly unlikely given current market conditions. The resistance faced by altcoins, including critical moving averages, signals a potential risk for those looking to invest in these assets.
Here are the overhyped that may fall ahead!
Solana (SOL)
Merten points out that Solana has shown resilience, bouncing back to its November 2021 highs in market cap. Yet, despite this recovery, SOL has not reached its peak levels from early 2022. The key concern is the stagnation in stablecoin liquidity, which is not at its 2021 highs and reflects a limited new participant influx. The lack of substantial new liquidity and the presence of speculative trading could hinder Solana’s ability to sustain its momentum.
Binance Coin (BNB)
For Binance Coin, Merten notes that the token has struggled since March, showing signs of distribution and lower lows. The stablecoin liquidity for Binance Smart Chain has flatlined at $5 billion after a significant drop from $13 billion. This stagnation indicates a lack of new user growth and liquidity, which could negatively impact BNB’s price and market stability.
Cardano (ADA)
Cardano faces significant challenges, with a market cap much higher than its underlying dollar liquidity suggests. The network’s total value locked (TVL) has declined from its peak in late 2023, highlighting reduced activity and adoption. The current TVL of $13 million compared to a market cap of $12.5 billion raises concerns about the platform’s ability to justify its high valuation amidst a slow-moving market.
Avalanche (AVAX)
Avalanche also shows weak performance, with its market cap dropping significantly from $24 billion in March 2024 to $7 billion. Despite some recent gains, the stablecoin liquidity has remained flat, failing to reach previous highs. This lack of liquidity and downward pressure suggest that Avalanche might struggle to regain its former highs or trigger a new altcoin cycle.
Bitcoin Can Save Altcoins, If?
He further highlights that Bitcoin can save altcoins. Bitcoin is currently hovering around its market cap of $1.4 trillion and facing resistance. Bitcoin must break and hold above $72K to spark a robust altcoin cycle.
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 short, Bitcoin’s strength could mean big gains for altcoins—if it surges, so might they!