10x Research: Altcoins are in a bear market, with 115 tokens averaging a 50% drop from this year's peak
The token unlock and adverse liquidity indicators are the main triggers for this altcoin crash.Original Title: “The Altcoin Bear Market: A Harsh Reality for Most Traders”
Author: 10x Research
Compiled by: Felix, PANews
Today's headline resonates with everyone who traded altcoins in 2017 or 2021. 10x Research analyzed 115 tokens, which have seen an average price drop of 50% from their 2024 highs. As explained below, the decline will worsen unless liquidity in the cryptocurrency market improves. Bitcoin (-11%) and Ethereum (-13%) are performing well, and both may benefit as smarter traders shift from altcoins to these two tokens (as seen in the past two cycles).
Top 115 tokens by market cap: Down from 2024 highs (Bitcoin only down 11% )
One of the key factors for surviving the altcoin bear market is effective risk management. Token unlocks and adverse liquidity indicators are the main triggers for this altcoin crash.
Last week was a critical moment in the crypto space and one of the most pivotal weeks of 2024. Cryptocurrencies, especially altcoins, saw significant declines. The market struggled to absorb a large number of token unlocks totaling $483 million, including Aptos $97 million, IMX $51 million, STRK $75 million, SEI $62 million, ARB $90 million, APE $18 million, and UNI $90 million. Early investors and venture capitalists seem to be under pressure to cash out. These fund flows are dragging down Bitcoin.
Additionally, Bitcoin miners have begun selling their Bitcoin holdings, and the ETH balance on exchanges has increased by $2.5 billion, which was previously associated with potential selling pressure. Despite improving inflation data, there has been a significant net outflow from Bitcoin ETFs (approximately $660 million over five days). The overall net flow across various segments (stablecoins, futures leverage, ETFs, etc.) was -$2.4 billion, marking the third week of net flow decline since the ETF launch in January 2024.
On May 8, 10x Research issued a warning, "Beware of token unlocks. Are venture capital funds shortening the altcoin cycle?" as nearly $2 billion worth of tokens are set to unlock rapidly over the next ten weeks. This could depress prices in the altcoin market. A core argument is that venture capital funds invested $13 billion in Q1 2022, while the market quickly entered a bear phase. With artificial intelligence becoming a hotter field, these funds are now facing pressure from investors to return capital.
Today, altcoins are in a brutal bear market. In 2024, 73% of these 115 tokens peaked in March. However, the situation changed in early March. Among the top 115 tokens by market cap, 17% (left side) peaked on March 14 (all have since declined).
In early March 2024, Bitcoin reached a potential year-end target of $70,000. Last year, 10x Research predicted a year-end target of $45,000 for 2023. In October 2022, it was forecasted that Bitcoin would rise to $63,000 at the time of the 2024 halving. Higher targets ($125,000) can be derived through quantitative analysis, but the shrinking liquidity in the crypto market is hindering market development.
