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Why are altcoins experiencing a general decline in value?

Kaori

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In addition to profit-taking, the high expectations for Bitcoin spot ETF have made hedging the mainstream choice.

"This market is really difficult to navigate," the cryptocurrency industry once again welcomes the "bull market big correction" in the form of a counterfeit currency version.

On the first day of work in 2024, the market's enthusiasm reached a new high after Bitcoin broke through $45,000. However, just one day later, the industry suddenly experienced a long-awaited "bull market correction". On January 3rd, the price of Bitcoin plummeted to $42,000, causing a net increase of $451 million in liquidations within an hour, leaving many "just fully loaded" investors in tears. And in the new week, the altcoin market was even worse, almost falling back to the position it was in during last week's flash crash or even lower.

Related reading: "A $450 million Bitcoin report?"

Why are Shanzhai coins falling?

Profit-taking

Recently, many altcoins have experienced a significant increase in value, but it is possible that some of the funds have been withdrawn after making profits. Taking SOL as an example, according to CoinGlass data, the contract position of SOL in CEX has decreased relatively by the year 2024.

As mentioned during the night of the Bitcoin price waterfall, the volatility of the cryptocurrency market is not only due to the emerging and immature nature of the market itself, but also influenced by various factors such as regulation, technological development, and the psychology of market participants. From the perspective of individual investors, there seems to be a general expectation that the cryptocurrency market will experience a certain degree of correction. Especially for the more volatile cryptocurrency market, history tells us that prices cannot continue to rise in one direction indefinitely.

Bitcoin spot ETF expectations are too high, hedging is mainstream

This week is a critical moment for the approval of Bitcoin ETF. Yesterday, Fox Business reported that BlackRock expects its Bitcoin ETF to be approved on Wednesday, January 10th. As a result, funds are being withdrawn from altcoins and flowing into Bitcoin. The market is also betting that if the Bitcoin ETF is approved, Bitcoin will rise due to this positive news, while if it is not approved, the short-term decline in altcoins will definitely exceed that of Bitcoin.

According to TradingView data, as of the time of writing, Bitcoin's market share has exceeded 54%, and the daily chart is about to enter oversold territory, indicating an increasing risk aversion in the entire market. The poor performance of altcoins is a market choice, as cryptocurrency users hope to minimize risks. BlockBeats has compiled a list of price movements for currencies other than Bitcoin for readers' reference.

Overview of the mainstream altcoin price drops

Except for Ethereum, strong altcoins have dropped by about 10%. Most altcoins are in an upward trend and their daily RSI indicators have basically returned to normal levels.

ETH

As of the time of writing, the ETH price is $2190, with a 24-hour decline of 2.4%.

By the end of 2023, the excitement surrounding the Ethereum Cancun upgrade began to rise. Although the current market is dominated by news of Bitcoin spot ETFs, with the continuous construction of the Layer 2 ecosystem and further expansion on the agenda, Ethereum's main stage has yet to come.

OP

OP is the token that started the Ethereum market trend. As of the time of writing, the price of OP is $3.02, with a 24-hour decline of 9.1%.

ARB

ARB reached a historical high of over $2 during the upward trend at the end of 2023. As of writing, the price of ARB is $1.62 with a 24-hour decrease of 9.55%.

SOL

With Solana's market value surpassing BNB, SOL's performance in this cycle can be described as remarkable. In last week's big sell-off, SOL quickly rebounded to its pre-crash price. As of writing, SOL is priced at $87, with a 24-hour drop of 6.2%.

SEI

SEI, as a rising star in the public chain industry, experienced its biggest surge since its launch at the end of 2023, which also drew renewed attention to parallel EVM. At the time of writing, SEI's price was $0.61, with a 24-hour decline of 8.14%.

TIA

With multiple projects airdropping tokens to TIA stakers, the price of TIA has broken through $17, reaching a new all-time high. As of writing in January, the price of TIA was $12.96, with a 24-hour decrease of 13%.