TL;DR
- Haseeb Qureshi from Dragonfly analyzes why altcoins are not showing the expected bullish momentum in the digital asset market.
- Data does not support the idea that retail investors are losing due to selling by institutional investors. There is also no evidence that investors are abandoning altcoins for popular memecoins like Dogecoin.
- Market distortions will naturally correct over time. Despite the current lack of momentum, historically, initial price drops in cryptocurrencies have been followed by significant long-term gains.
Altcoins have been under scrutiny in the digital asset market in recent weeks. Dragonfly partner Haseeb Qureshi has shared his insights into why these cryptocurrencies are not experiencing the expected bullish momentum.
According to Qureshi, one of the most widespread theories suggests that retail investors are falling victim to massive selling by institutional investors and opinion leaders. However, data does not support this claim, as the altcoins in question showed stability until early April before a uniform decline in their prices began.
— Haseeb ＞|＜ (@hosseeb) May 19, 2024
Another theory suggests that retail investors are abandoning altcoins in favor of popular “memecoins” like Dogecoin. However, Qureshi shows that the peak of memecoin trading occurred in March, while the decline in the value of altcoins began in April.
The third and final theory attributes the lack of momentum to the low initial supply of new cryptocurrencies, which hinders price discovery. Although this may have some validity, Qureshi points out that there is no clear correlation between supply and coin performance.
Altcoins Will Rise Sooner or Later
Instead of sticking to these theories, Qureshi suggests that market distortions will naturally correct over time. Additionally, he argues that historically, initial price drops have been followed by considerable long-term gains.
Qureshi emphasizes the importance of investors and founders focusing on building valuable technology rather than obsessing over initial valuations. On the other hand, he advises exchanges to consider listing cryptocurrencies at lower prices initially to avoid market distortions.
Although altcoins are currently not experiencing the expected bullish momentum, Qureshi maintains an optimistic view of their future. Eventually, the market will correct itself over time, and cryptocurrencies with solid underlying technology will eventually see an increase in value. Ultimately, the altcoin market will continue to evolve and mature as investors and companies explore new opportunities.
