Altcoin Surge Stalls as Distrust and Unlimited Supply Dampen Market

Despite Bitcoin's dominance this year, altseason (the period of altcoin outperformance) remains elusive. According to Route 2 FI, this may stem from a lack of trust in new tokens due to the prevalence of "pump and dump" schemes by early investors, leading to a decline in altcoin investment and highlighting the scarcity issue as an infinite number of tokens can be created, potentially exceeding demand.

Altcoin Season Eludes Market Amid Distrust and Lack of Scarcity

Despite Bitcoin's dominance throughout the year, the highly anticipated "altseason," where smaller cryptocurrencies experience significant gains, remains elusive. According to prominent analyst Route 2 FI, there may be a compelling reason behind this lagging performance.

Distrust Dampens Altcoin Investments

Route 2 FI asserts that a decline in altcoin investments stems from a waning trust in new tokens. He alleges that wealthy investors often gain early access to these tokens before their public launch on exchanges. Consequently, upon listing, these investors promptly sell their holdings, causing the value of the tokens to plummet.

This pattern has led to a growing skepticism among investors, who have become increasingly selective in their altcoin choices. The analyst raises the question of whether Bitcoin maximalists, who believe in the supremacy of the original cryptocurrency, may have merit in their skepticism.

Scarcity Dilutes Altcoin Value

Unlike Bitcoin, which has a finite supply of 21 million coins, altcoins can be created indefinitely. This abundance undermines their scarcity and limits their potential for sustained value appreciation. Many altcoin projects lack tangible value propositions, further diminishing their appeal.

Even Ethereum, the second-largest cryptocurrency, has yet to find its "killer app," an application that can justify its high valuation. As Route 2 FI succinctly states, "At a certain point, supply will far exceed demand" for new altcoins.

Fewer Success Stories

Investors are also recognizing the rarity of successful altcoin projects. The vast majority of tokens fail to gain significant traction or longevity. This realization has contributed to the decline in altcoin investments and fueled the cautious approach of many market participants.

Conclusion

The absence of the anticipated altseason is a consequence of various factors, including distrust in new tokens stemming from early investor dumping and a lack of scarcity due to the unlimited creation of altcoins. As a result, investors are becoming more discerning in their altcoin choices, recognizing the need for tangible value propositions and scarcity in order to support sustained growth.