Cryptocurrency "618" promotion, is there still hope for altcoins?

Author: Azuma, Odaily Planet Daily

On the day of the 618 "big promotion," the downturn in cryptocurrency continues.

As Bitcoin briefly fell below 65,000 USDT this morning, ETH and many other mainstream altcoins once again experienced a collective plunge, making the real-time market interface on OKX look like "a river of blood":

• ETH dropped to a low of 3,350 USDT, currently reported at 3,402.44 USDT, with a 24-hour decline of 5.64%;

• SOL dropped to a low of 127.22 USDT, currently reported at 132.03 USDT, with a 24-hour decline of 10.98%;

• PEPE dropped to a low of 0.000009573 USDT, currently reported at 0.00001013 USDT, with a 24-hour decline of 16.18%;

• OP dropped to a low of 1.67 USDT, currently reported at 1.74 USDT, with a 24-hour decline of 15.85%;

• STRK dropped to a low of 0.6614 USDT, currently reported at 0.71 USDT, with a 24-hour decline of 22.62%;

• TIA dropped to a low of 6.007 USDT, currently reported at 6.38 USDT, with a 24-hour decline of 21.04%;

• Additionally, the newly listed ZK dropped below 0.2 USDT, hitting a low of 0.1906 USDT, currently reported at 0.1935 USDT, with a 24-hour decline of 36.4% (based on pre-market prices)… Some users, feeling despondent, even joked: "ZK is indeed Endgame…"

Affected by the overall market downturn, the total market capitalization of cryptocurrencies continues to shrink. According to CoinGecko data, the total market capitalization of cryptocurrencies has now fallen to 2.46 trillion USDT, a 24-hour decline of 4.5%.

In terms of derivatives trading, Coinglass data shows that in just the past hour, the total liquidation amount across the network has reached 178 million USDT, with the vast majority being long liquidations, totaling 173 million USDT. In terms of cryptocurrencies, BTC and ETH have been rarely pushed to second place by "other" cryptocurrencies, which topped the list with 41.2 million USDT.

A Bull Market Unrelated to Altcoins

Looking back at the overall market changes during this bull market, although BTC once strongly refreshed its historical peak, altcoins (except for a few sectors like meme coins) have never managed to perform as investors expected.

Especially after BTC entered a correction phase in March, the altcoin market has "fallen without looking back," with several popular altcoins like ORDI, OP, ARB, and TIA experiencing cumulative declines of over 70%.

Given the current market situation, the overall trend of altcoins seems to have completely decoupled from BTC and ETH. Considering that most retail investors primarily hold altcoins, many retail investors lament: "I watch Bitcoin hit new highs, but my positions keep shrinking."

Yesterday, Odaily Planet Daily published two analysis articles on market liquidity and altcoin trends titled "Data Unraveled: ETFs Are Delaying the Real Bull Market" and "Times Have Changed, This Cycle's Altcoin Season Will Be Absent."

Based on the expectations given in these two articles and other market analyses, the main reasons for the decoupling of altcoin trends include:

First, the approval of ETFs has changed the liquidity transmission model in the market. Previously, the path for new funds entering the market was generally "stablecoins ------ BTC, ETH ------ altcoins," but now, new funds from traditional markets are more inclined to invest directly in BTC through ETFs, which has led to a lack of liquidity in the altcoin market.

Second, the continuous large-scale unlocking of "VC tokens" has brought persistent selling pressure, resulting in a "supply exceeds demand" market structure. A closer look at the circulation changes of some altcoins reveals that although the prices of some tokens continue to fall, their circulating market value keeps hitting new highs.

Third, the new projects with sky-high opening prices are continuously draining the remaining liquidity in the market. io.net, ZKsync, LayerZero, Blast… a host of long-anticipated popular projects are lining up for launch, with FDVs generally reaching the level of billions of dollars, further exacerbating the liquidity shortage in the altcoin market.

The Darkest Hour for Altcoins, Institutions Show Diverging Opinions

In this darkest hour, predictions about the future of altcoins seem to have reached a crossroads, with various institutions giving completely opposite judgments.

Quinn Thompson, founder of crypto hedge fund Lekker Capital, directly advises against investing in altcoins at this time.

Thompson pointed out several indicators of market instability, including high leverage and open contracts, a lack of panic buying, and stagnant stablecoin supply. He believes the market is experiencing increasing selling pressure, especially from venture capital funds that need to raise funds, leading to more selling than buying. This situation, combined with low trading volumes in the summer, makes it difficult for altcoins to gain traction.

Andrei Grachev, co-founder of DWF Labs, expects a wave of altcoin bull markets in the coming months, provided that BTC stabilizes.

Grachev noted that since March 2024, the Google search volume for altcoins has been declining. A stable Bitcoin price can inject confidence into the market, but it cannot rise 50 times, at least not now, while altcoins can. If Bitcoin's price can remain stable, a wave of (altcoin) bull markets is expected in the coming months.

What Are the Whales Doing?

After this morning's brief decline, Lin Chen, head of Deribit's Asia-Pacific business, revealed on X that the largest block options transaction today involved a whale selling 70,000 call options for the end of July while buying 70,000 call options for the end of the year, totaling 100 BTC, for which they paid 883,000 USDT.

Lin explained that this indicates the whale's current stance is "bearish in the short term, bullish in the long term," suggesting they believe that while the summer may be slow, they are optimistic about a significant market movement by the end of the year, with Bitcoin's price expected to break through 70,000 USDT again.

Combining this with the institutional predictions article titled "Big Volatility Ahead, How Institutions View Future Market Trends?" compiled by Odaily Planet Daily last week, this aligns with the views of most institutions, including Bitfinex, regarding Bitcoin's future market trends.

However, considering the current decoupling of altcoins from BTC, these predictions are difficult to apply to altcoins.

At present, the only effective advice we can provide in terms of operations is to avoid leveraging altcoins, control risks, and refrain from impulsive actions.