Why Solana Avalanche and Other Altcoins are Experiencing a Drastic Market Crash

The cryptocurrency market is currently going through a period of consolidation after a strong rally that took place from October to March. While this situation is manageable for investors in Bitcoin and Ethereum, those who hold smaller altcoins are feeling the pressure. The sentiment in crypto communities has turned negative, and many altcoins have experienced significant drops in value.

Let’s take a closer look at what’s happening in the altcoin market.

Major altcoins have taken a hit, with Solana and Avalanche dropping by 40% to 50% from their March peaks. Layer-1 tokens like SUI and Aptos have seen an even more significant crash, with declines of 60% to 70%. Experts attribute this sharp decline to factors such as token unlocks, venture capital sell-offs, and a lack of new money entering the market.

One of the main issues affecting altcoins is the increasing supply of tokens due to scheduled unlocks. For instance, Solana’s supply grows by 74,000 tokens each day, equivalent to about $10 million at current prices. This surge in supply, combined with venture capital funds cashing out their early investments, has resulted in a decrease in prices.

Liquidity inflows into the crypto market have also stagnated, as evidenced by the stablecoin market cap remaining flat since April. Earlier this year, there was a $30 billion increase, but since then, there has been a lack of growth. The combined market cap of the top four stablecoins shows reduced trading activity and a decline in investor interest.

Looking at historical trends, June has traditionally been a challenging month for altcoins, and this year is no exception. As of June 22, 2024, the aggregated market cap of crypto assets excluding Bitcoin and Ethereum stands at $594.967 billion, reflecting a 14.30% drop over the past month. This is a significant decrease from the peak of $706.676 billion earlier in June and the yearly high of $775.36 billion on March 31.

In conclusion, as the crypto market goes through a consolidation phase, smaller altcoins are facing significant challenges. Keep an eye on Coinpedia for more updates on the altcoin market.