The phenomenon of altcoins rising at the end of a bull market is a common trend in the cryptocurrency market. This is mainly caused by multiple factors such as Bitcoin dominance, capital flow effect, changes in risk appetite, market cyclicality, publicity and marketing, technology and innovation. Specific analysis:
1. Bitcoin dominance: In the early and middle stages of a bull market, investors usually buy Bitcoin in bulk because it is the largest and most well-known cryptocurrency by market value and is regarded as the leader of the entire market. When the price of Bitcoin rises sharply, it attracts a lot of money and attention.
2. Capital Flow Effect: When Bitcoin's price reaches a certain height and begins to consolidate or experience price stagnation, investors start looking for other investment opportunities. At this time, funds will flow from Bitcoin to smaller market cap altcoins, driving up the prices of these altcoins.
3. Changes in Risk Appetite: At the end of a bull market, market sentiment typically becomes more optimistic, and investors' risk appetite increases. At this point, investors are more willing to invest in high-risk, high-return altcoins rather than continue holding relatively stable Bitcoin.
4. Market Cyclicality: Bull markets are usually divided into multiple stages, with the early stage dominated by the rise of Bitcoin and some mainstream cryptocurrencies (such as Ethereum), while later stages will see more altcoins joining the upward trend. This cyclical phenomenon results in significant rises for altcoins only at the end of a bull market.
5. Promotion and Marketing: At the end of a bull market, many project teams will intensify their promotional efforts, utilizing market enthusiasm to attract investors. The promotional activities and marketing strategies of these projects will also drive up the prices of altcoins.
6. Technology and Innovation: Some altcoins may launch new technological updates or partnerships at the end of a bull market, and these positive news and developments can attract investors' attention, thereby driving prices up.
Why do altcoins fall but not rise?
The reasons why altcoins fall but do not rise mainly include the decline in market cap share, peak unlock periods, adjustments in investment strategies, Bitcoin narrative-dominated cycles, specific narratives outperforming altcoins, the number of altcoins reaching historical highs, and token unlocks flooding the market.
The market capitalization of altcoins is relatively low compared to mainstream coins like Bitcoin, which limits their influence in the market, making it difficult for altcoins to rise independently of the price fluctuations of mainstream coins. The altcoin market is about to experience a peak in unlocks, meaning a large number of tokens will be unlocked and enter the market, which will put pressure on the market and suppress price increases.
As market conditions change, investors need to adjust their investment strategies, which may lead funds to flow towards more stable and mature assets rather than riskier altcoins. In the current market cycle, Bitcoin's strong performance has attracted a large influx of capital, while altcoins have not received the same market attention and capital support.
Certain specific narratives or assets within a particular domain perform better than altcoins, leading capital to lean towards these better-performing assets. The crypto market has created a large number of new tokens, which has significantly increased the supply of altcoins, while demand is relatively insufficient, impacting price increases. The large number of tokens unlocking and entering the market increases the supply, while also suppressing price increases, creating persistent pressure.
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