The Perilous Path of Altcoins: A Trader’s Perspective

For four months, the altcoin market has been gripped by fear and despondency. However, after the reaccumulation phase concludes, many will surge by “hundreds and thousands of percent,” while some will “perish,” trader Vladimir Cohen told ForkLog.

The expert highlighted that the current cycle is characterized by an enormous number of tokens (over 2.5 million), complicating the task of selecting the right assets.

The situation now corresponds to a stage of reaccumulation. This involves the consolidation of prices after a pump and decline, preceding a more significant rise and prolonged distribution.

“When sentiment is in the zone of fear and depression, major players accumulate assets. When greed and euphoria dominate the market, they sell to retail investors. The duration of phases may vary, but they constantly alternate. During accumulation, volatility and trading volumes significantly decrease, while the opposite trend is observed during distribution,” Cohen commented.

The altcoin capitalization chart, excluding Ethereum, highlights the accumulation stage from May 2022 to December 2023, when the figure fluctuated between $280 billion and $470 billion. This was followed by a powerful pump, continuing until April 2024, with the metric jumping to $788 billion.

According to Cohen, in April, liquidity began “leaking” from the sector. Currently, we are witnessing a decline phase with historically strong support in the $420 billion-$470 billion range, he added.

The expert forecasts that reaching a new ATH of $1.1 trillion is “only a matter of time.” The current figure stands at $565 billion.

He noted that altcoins no longer fall as sharply during Bitcoin dumps, although a correction to $400 billion-$450 billion is quite possible. Altcoin investors have shifted to a hodl mode and are prepared to patiently endure downturns, he pointed out.

“I expect a redistribution of liquidity within the sector and an influx of fresh money due to QE by central banks and new market narratives,” Cohen concluded.

Earlier, Bitfinex noted that altcoins remain relatively strong amid the weakening of digital gold, and analyst and MN Trading founder Michaël van de Poppe observed a bullish impulse in several tokens.

Previously, Derive founder Nick Forster deemed a return of Ethereum to its ATH by the end of the year “unlikely.”