Crypto Analyst Miles Deutscher Discusses Fundamental Flaws Causing Altcoins to Underperform

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Crypto Analyst Miles Deutscher Discusses Fundamental Flaws Causing Altcoins to Underperform

Crypto analyst Miles Deutscher discussed how altcoins have been struggling compared to Bitcoin due to a fundamental flaw in the market. Deutscher highlighted the issue of altcoin dispersion, which has led to a flood of new tokens entering the market, contributing to oversupply and creating a bearish environment for altcoins. The influx of new projects following massive venture capital investments in 2021 led to a significant increase in the total number of crypto tokens, tripling between 2021 and 2022.

The market downturn in 2022 caused many projects to delay their launches, waiting for better conditions, and by the fourth quarter of 2023, these projects began launching en masse, further contributing to an oversupply of tokens. Deutscher pointed out that over 1 million new crypto tokens have been launched since April 2024, adding around $200 million of new supply pressure per day to the market. This oversaturation of tokens, combined with insufficient new liquidity, has created a challenging environment for altcoins, impacting their performance and making it hard for retail investors to achieve significant returns. Deutscher emphasized the need for the market to be more accommodating and straightforward to attract retail investors again, suggesting measures such as exchanges being more selective with listings and delisting non-performing tokens to free up liquidity. The ongoing high dilution of altcoins has been a persistent problem for digital asset investors, with uncertainty surrounding whether this is a temporary phenomenon or a new market equilibrium.