Altcoins
Here’s What’s Behind Altcoin Weakness, According to Pantera Capital Portfolio Manager Cosmo Jiang
Pantera Capital, a digital asset-focused investment firm, highlights the main reasons why it believes the altcoin market is depressed.
In his latest Blockchain Letter, Pantera Capital Portfolio Manager Cosmo Jiang said that macroeconomic conditions are hurting the cryptocurrency market, as are fears of oversupply and a rise in altcoin projects.
Jiang also said that recent actions by the U.S. Securities and Exchange Commission (SEC) against blockchain development firm Consensys and decentralized exchange (DEX) Uniswap (United) alleged violations of securities laws have created regulatory uncertainty for alternative projects.
“We identify a few macroeconomic and cryptocurrencies reasons for this decline. The main macro headwind in early April was that markets began to reprice a higher-for-longer rate scenario due to a still-strong economy and high inflation, contrary to the previous view that there would be a rapid rate cut.
On the crypto front, markets were weighed down primarily by oversupply concerns. For Bitcoin, the German government began liquidating its $3 billion position and Mt. Gox’s $9 billion distribution schedule was confirmed. Long-tail tokens faced supply headwinds, both from increased new token launches, diversified investor focus, and limited capital, as well as continued private investor acquisition of newly launched tokens over the past year.
Additionally, SEC investigations into Consensys and Uniswap have created some uncertainty for some protocols.
Jiang says that Bitcoin (Bitcoin) and Ethereum (ETH) have significantly outperformed the broader cryptocurrency market so far in 2024.
“Overall, the breadth has been limited and there has been significant underperformance year-to-date in the broader crypto landscape relative to Bitcoin and Ethereum, which is analogous to the momentum in stocks this year, the Magnificent 7 versus the rest. To illustrate this point, we have included below the return distributions of the top 400 tokens by market cap this year.”
Source: Pantera Capital
At the time of writing, Bitcoin is trading at $65,314, up 1.6% over the past seven days. Meanwhile, Ethereum is trading at $3,327 at the time of writing, down nearly 2% over the past week.
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