What’s Causing the Crash in the Altcoin Market?

The altcoin market is currently experiencing a prolonged decline, posing significant challenges for investors. This downturn can be attributed to several interrelated factors that have created a complex and unfavourable environment for these digital assets.

3 min read4 days ago

Analysts have issued a grave warning, suggesting that a major crash could be imminent. They note that a significant warning signal is visible on the Bitcoin chart, with the price continuing to decline from a critical resistance area. This bearish trend is likely to influence the altcoin market, which may experience further short-term declines if current conditions persist.

Oversupply of New Coins

One of the primary contributors to the decline in the altcoin market is the launch and oversupply of new coins. This influx has led to an imbalance between supply and demand, driving prices down. Crypto analyst Pentoshi estimates that around $200 million per day is required to stabilise the prices of these newly launched coins. The market’s struggle to absorb the flood of new assets has resulted in a steep decline in altcoin prices.

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Influence of Bitcoin

Bitcoin, the largest asset by market cap, significantly influences the momentum of other cryptocurrencies. At the time of writing, Bitcoin is trading at $65,181, down 0.93%. It has struggled to break the $65,000 range, with nearby resistance at $66,245 and support at $64,235. Bitcoin’s price movements often set the tone for the rest of the market, contributing to the overall bearish sentiment.

Analysis of Major Altcoins

The performance of major altcoins reflects the broader market struggles:

Ethereum (ETH): Currently trading at $$3,535.90, up by 2.5%. Its nearest resistance is at $3,580, with support at $3,389. Over the past week, Ethereum has increased by 0.26%.
Dogecoin (DOGE): Trades at $0.1247, up by 1.6. It has seen a 10.88% decline over the past week and a 18.66% decline over the past month. Resistance is at $0.1379, with support at $0.1100.
Cardano (ADA): Priced at $0.375, down 7.31% in the last 24 hours, and a weekly decline of 12.71%. Resistance is at $0.410, with support at $0.267.
Shiba Inu (SHIB): Trading at $0.00001782, down 10.60% in the last 24 hours, and down 19.33% over the past week. Key resistance is at $0.00001999, with support at $0.00001620.
Uniswap (UNI): Priced at $9.65, down 11.31% in a day but up 3.83% over the past seven days. Major resistance is at $10.55, with support at $8.36.
Solana’s Bearish Trend; Solana is also exhibiting a short-term bearish trend. It recently broke below the critical support area between $140 and $144, intensifying the bearish outlook. A further decline brought the price down to the next support level at $128. Currently, $140-$144 is acting as new resistance, with strong resistance also around $160. A breakout above $160 is necessary to shift momentum back to a bullish trend. Until then, Solana is expected to continue its downward trajectory.
Chainlink’s Bearish Pattern: Chainlink is forming a massive bearish head and shoulders pattern on the 3-day timeframe. This pattern will be confirmed if the price breaks below the neckline at around $13, ideally with a daily, 3-day, or weekly candle close. A break below $13 could set up a bearish price target around $8.20, indicating a potential 36% move down from the breakdown point.

Conclusion

The prolonged crash in the altcoin market is driven by a combination of factors, including the oversupply of new coins, the influence of Bitcoin’s price movements, and broader market sentiment. Analysts warn of further declines, with key altcoins showing significant bearish patterns. Investors should remain cautious and closely monitor critical support and resistance levels as the market navigates through this challenging period.

Despite some occasional positive movements, the overall trend for most altcoins remains bearish, with prices struggling to maintain a positive trajectory.