Nasty Altcoin Wipeout, Even Worse Sentiment
The weekend’s wipeout has seemingly worsened altcoin sentiment, but we believe this shift has been an ongoing trend as altcoin trading simply becomes more challenging.
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TLDR
- ETH dropped 35% during this wipeout and some low cap alts are now 60-80% from their peak. OTHERS (the top 125 coins by market cap excluding the top 10) fell around 35%, in line with ETH. It was bad, but not COVID crash bad. OTHERS ended Monday with a 4.6% gain.
- The crash wiped many traders in a vicious liquidation cascade, leading to worsened altcoin sentiment. However, sentiment issues in altcoins run deeper than this recent liquidation cascade in isolation.
- Altseasons have been muted due to the oversaturation of new altcoins and relatively little new capital entering the market. Rotations into isolated narratives has been important to capture sizeable gains.
- The rapid creation and trading of micro-low cap memecoins is starving mid-large cap altcoins of liquidity, making altcoin trading harder as there is too little capital chasing an ever-increasing number of assets.
- It is not all doom and gloom. There continue to be pockets of strength in the market and new narratives are just around the corner.
