3 Reasons Why the Altcoin Winter May Last Longer

The altcoin winter may last due to significant challenges such as low liquidity, Bitcoin's dominance amid geopolitical instability, and severe market dilution. While some major altcoins may still have potential in the future, the overall picture suggests that this difficult phase is unlikely to end soon. Here are the top three reasons. #1. Transaction data shows that investors are still overlooking Altcoin According to CryptoQuant, the "Accumulated Buy/Sell Quote Volume Gap over 1 Year for Altcoin" is currently at negative 36 billion dollars and shows no signs of recovery. This index reflects the gap between the buying and selling quote volumes for altcoin. The negative figure of 36 billion dollars means that over the past year, the total selling quote volume of altcoin has exceeded the buying quote volume by 36 billion dollars.

Investors are selling altcoins more than they are buying. This trend may stem from a risk-averse mentality or a belief that altcoins are no longer attractive in the short term. "Although Bitcoin is enjoying a price surge, altcoins are still behaving as if it is still winter. Unless this index starts to rise again, expecting a comprehensive altcoin season or altcoin FOMO may just be wishful thinking," analyst Burakkesmeci commented. Therefore, to confirm the start of the altcoin season, we need to see this index increase or turn positive. #2. Geopolitical tensions reinforce the dominance of Bitcoin Global geopolitical tensions, most recently the Israel-Iran conflict, have created an unfavorable environment for altcoins. When Israel attacked Iran, the price of Bitcoin fell—but altcoins suffered even heavier losses. On the other hand, when Bitcoin rises in price, it attracts most of the attention and capital from investors, overshadowing altcoins. This pattern has existed since the beginning of this year. As a result, Bitcoin Dominance (BTC.D) increased in both cases. In fact, BTC.D has had six consecutive green weekly candles and is holding above 64%.

Some analysts believe that the altcoin season may have started in June, if there is no Israel-Iran conflict. "The Altcoin season has almost begun... Ethereum has outperformed BTC for about a week and the Israel-Iran war and possibly World War III has begun. Currently, BTC's dominance is near a 5-year high, far from the altcoin season... The only thing we can do is wait, HOLD and hope. Stay strong everyone," investor Gem Hunter commented. Moreover, the current geopolitical conflicts are unlikely to be resolved in a few weeks or months. This means that the risk-averse sentiment may continue to dominate the market, putting altcoins at a disadvantage. #3. Record Altcoin supply dilutes the market According to CoinMarketCap, as of June, the number of altcoins has exceeded 17.34 million - an increase of 850 times compared to December 2021. Meanwhile, the market capitalization of altcoin (TOTAL2) is $1.13 trillion, still 30% lower than the peak at the end of 2021.

This explosion has created a highly fragmented market. The inflow of capital is decreasing and spreading too thin over too many assets. Only a few major altcoins can attract the attention of investors. Even if altseason occurs, it may be highly selective. Coins like Ethereum, Solana, and XRP may benefit, but most smaller altcoins will struggle to break out. This dilution reduces the chances of success for new or lesser-known projects. It also makes investors more cautious when selecting altcoins to support. As a result, even in the most optimistic scenario, most altcoins will still lag behind.