Crypto News: Hedge Fund Founder’s Altcoin Prediction
Quinn Thompson, the brain behind cryptocurrency hedge fund Lekker Capital, recently shared his evaluation of altcoins, shedding light on their future prospects.
Thompson’s stark warning signals a looming liquidation wave in the crypto market, signaling trouble ahead. Despite the market’s historical resilience, even major cryptocurrencies are struggling to regain their footing amidst high leverage and open interest levels, as per Thompson’s assessment.
The introduction of Bitcoin spot ETFs has brought about a paradigm shift in the market dynamics, according to Thompson. Traditionally, during bull markets, capital would flow from Bitcoin and Ethereum towards smaller altcoins as trader confidence grew. However, the current scenario paints a different picture altogether.
Thompson highlighted the challenges faced by investors looking to diversify into altcoins through ETFs, citing a lack of demand that could potentially lead to an inflation of altcoin supply by approximately $3 billion monthly over the next couple of years. Drawing a comparison to the stock market, Thompson emphasized the inevitable divergence in performance among different assets.
The dwindling ETF inflows and the trend of venture funds liquidating crypto assets have further exacerbated the situation, with stablecoin supply plateauing. Despite repeated attempts to break previous highs, Bitcoin’s lack of momentum has been concerning, as noted by Thompson.
The stagnation in demand is expected to hit altcoins hard, with many projects unlocking previously restricted token supplies, increasing selling pressure. Thompson anticipates that the combination of significant token unlocks and VC selling could overwhelm most tokens, leaving little room for new buyers to step in.
While panic has yet to set in, Thompson foresees a shift in sentiment on the horizon. He concluded his remarks with a disclaimer, stating that his views should not be taken as investment advice.
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