Research institution 10x Research analyzed 115 tokens and found that the average price has dropped 50% from the high point in 2024. The main reasons for the recent collapse of altcoins are token unlocking and unfavorable liquidity indicators. This article is based on an article written by 10x Research, compiled, translated, and written by PANews.
(Background:
Arthur Hayes shouts: I’m increasing my positions in these two altcoins, legendary trader GCR: Market still in a bull market
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Recent market movements have resonated with everyone who traded altcoins in 2017 or 2021. 10x Research analyzed 115 tokens, and the average price has dropped 50% from the high point in 2024. Unless the liquidity of cryptocurrencies improves, the decline will become more severe.
In comparison, Bitcoin (-11%) and Ethereum (-13%) have performed well, as smarter traders are shifting from altcoins to these two tokens, which may benefit them (as seen in the past two cycles).
The reasons for this recent collapse of altcoins?
One of the key factors surviving in the altcoin bear market is effective risk management. Token unlocking and unfavorable liquidity indicators are the main drivers of this altcoin crash.
Last week was a crucial moment in the crypto space, and also one of the most critical weeks in 2024. Cryptocurrencies, especially altcoins, plummeted significantly. The market struggled to digest the massive token unlocking of Aptos $97 million, IMX $51 million, STRK $75 million, SEI $62 million, ARB $90 million, APE $18 million, and UNI $90 million, totaling $483 million. Early investors and venture capitalists seem to be under pressure to cash out. These capital flows are dragging down Bitcoin.
Furthermore, Bitcoin miners have started selling their Bitcoin inventory, and exchanges’ ETH balances have increased by $2.5 billion, which is related to potential selling pressure. Despite improving inflation data, Bitcoin ETFs have seen significant net outflows (around $660 million outflow in 5 days). The overall net flow in various segments (stablecoins, futures leverage, ETFs, etc.) is -$2.4 billion, the third consecutive week of net outflows since the introduction of ETFs in January 2024.
On May 8th, 10x Research issued a warning, “Beware of token unlocking. Will the venture capital foundation shorten the altcoin cycle? Almost $2 billion worth of tokens will be rapidly unlocked in the next ten weeks. This may lower the price of the altcoin market.” A key argument is that venture capital firms invested $13 billion in the first quarter of 2022, but the market quickly entered a bear market. With artificial intelligence becoming a more popular field, these funds are now facing pressure from investors to return capital.
Now, altcoins are in a brutal bear market. In 2024, 73% of these 115 tokens reached their peak in March. However, things changed in early March. Among the top 115 tokens by market capitalization, 17% (on the left side) reached their peak on March 14th (all now showing a decline).