Altcoins
It’s time for altcoin investors to panic, says crypto hedge fund – DL News
- The crypto market could face tough times, crypto hedge fund Lekker Capital told DL News.
- Decreasing demand, increasing supply, and changing market structure could be particularly challenging for altcoins.
The crypto market is on the cusp of a serious liquidation cascade.
This is according to Quinn Thompson, founder of crypto hedge fund Lekker Capital.
“Expect Most Altcoins to Be Delisted,” Thompson said. “The market seems to have lost all ability to rebound, even in the majors, while at the same time, leverage and open interest remains high. »
Thompson said DL News that the introduction of Bitcoin spot exchange traded funds changed the structure of the crypto market.
In previous bull markets, flows rippled out of Bitcoin and Ethereum into smaller cryptocurrencies as traders became more daring.
But these days, investors who gain exposure to Bitcoin through ETFs don’t have an easy way to purchase altcoins, or coins other than Bitcoin, in their brokerage accounts.
“There is a clear and simple lack of demand to support monthly altcoin supply inflation of approximately $3 billion over the next two years,” Thompson said. DL News.
“Just like in stock markets, where some stocks do well and others do poorly, that will be the case here, and the dispersion will continue to increase instead of decrease,” he added.
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More supply, less demand
Thompson noted that ETF inflows are declining and venture funds are raising capital by selling their crypto holdings. The supply of stablecoins – sometimes used as a metric by traders to gauge demand – has also reached a plateau.
“Despite a number of attempts to break all-time highs, Bitcoin just hasn’t been able to muster the strength,” Thompson said.
The lull in demand will likely be particularly felt by altcoins, Thompson said, as many crypto projects unlock supply of their tokens.
In other words, project teams and their investors will continue to have more and more access to coin reserves that they have not been able to sell until now. And it is now unlikely that new buyers will step in to cushion the blow.
“As we enter an already low volume summer period, the combination of a significant token supply unlock and selling pressure from venture capitalists will likely be too much of a battle for most tokens “Thompson said.
“Don’t panic just yet,” he added. “I expect that to change.”
Tom Carreras is markets correspondent for DL News. Do you have a tip about the crypto markets? Contact us at tcarreras@dlnews.com