Altcoins
Crypto Analyst Unveils Reasons for Latest Altcoin Crash, Predictions Rebound Amid Turmoil
April 14, 2024 1:56 p.m. | 2 minutes of reading
The crypto analyst known for accurately predicting the end of Bitcoin (CRYPTO: BTC) The 2021 bull market shared insight into the recent downturn in the altcoin market.
Friday, a pseudonymous crypto strategist Pentoshi shared his view on X, formerly known as Twitter, that the recent altcoin crash can be attributed to simple supply and demand dynamics combined with a loss of momentum.
Pentoshi explained that the frequent launch of new altcoins has diluted demand. This saturation led to a scenario in which approximately $200 million in new money per day was needed to maintain current prices.
Eventually, supply outstripped demand, leading to sharp market declines, he said.
“We got to the point where many new coins were being launched daily and each one needed more and more liquidity to support it. At one point it needed about $200 million in new money per day to support the current prices,” Pentoshi said in an article highlighting the imbalance that precipitated the crash.
I always relate markets to sports or a game
Why because you play both offense and defense and there are huge changes in dynamics
Sometimes you can feel the momentum weakening and at that point the momentum swings the other way. Even if it’s only temporary
So what happened here? I think that for the… pic.twitter.com/RLnLMpjDKy
—Pentoshi 🐧 euroPeng � (@Pentosh1) April 12, 2024
Despite this significant correction, Pentoshi remained optimistic about the health of the broader crypto bull market.
Read also: Crypto Markets Crash Following Iranian Drone Attack on Israel, Investors Warn of Continued Sell-Off
He stressed that the slowdown represents a local, not macroeconomic, peak and suggested that the market is far from having reached a point of “infinite supply” with no buyers, which typically signals the end of a bull market.
“We reached a balance point, and then the other team took over temporarily,” Pentoshi added.
Pentoshi analysis of TOTAL3, an index that tracks the value of the altcoin market, showed a decline of around 30% from its 2024 high of $788.85 billion to a low of 563, 85 billion dollars.
However, he expects support of around $600 billion and a rebound to a market valuation of $1 trillion.
“It’s not a macro summit, in my opinion, just a local summit,” Pentoshi added.
However, he cautioned that a change in this outlook would depend on significant changes, such as the loss of Bitcoin market structure or substantial outflows from Bitcoin ETFs.
Now read: Amid Dogecoin crash, 374 million DOGE moved from Robinhood to an unknown wallet
Photo: Shutterstock
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