Leading crypto analyst Route 2 FL revealed in a Monday, April 22 Substack publication that the present inflows destined for altcoins suffer insufficiency to offset several of the significant tokens unlocks and venture capitalists (VCs) selling pressure.
The crypto analyst considers the profit-chasing VCs are hurting the long-term sustainability of the newly unveiled cryptocurrencies. The analyst observed that the influx of money-hungry VCs brings increased liquidity to the altcoin launches that strangle the tokens in the long-term.
Venture Capitalists Bringing Immense Sell Pressure
Route 2 FL warns that the VCs bring immense sell pressure that hurts the price action in the long-term of the newly launched tokens. The analyst adds that permissionless token listing alongside the profit-chasing VCs is dangerous to the tokens.
The analyst considers that over 100 tokens are unveiled annually, diluting the existing. The analyst illustrates that April 2024 had selective inflows into the altcoins and was inadequate to offset the big unlocks.
The analyst considers the primary concern witnessed during the recent token launch trend is the fully diluted valuation (FDV). The launch promises to allocate big airdrops for early adoption.
The process often presents extensive unlocking schedules for early VC investors. Route 2 Fl laments that the mechanism translates to reduced prices for most new tokens.
Route 2 Fl observes that most new VC scam coins identified as high FDV coins often dump hard. This awareness can help one leverage the pair trading advantage or exploit the situation one desires to hedge.
Are Money-Hungry VCs Elevating Bearish Sentiment for Altcoins?
Route 2 Fl criticism of money-hungry VCs coincides with a period when the altcoins’ market value hovers around $1.05 trillion. TradingView data shows the altcoins have rallied 38% year-to-date from the $760 billion realized at the onset of 2024.
The pseudonymous analyst considers that the huge VC unlocks often face reduced demand from crypto investors. The investors cannot consume the influx in the coin’s supply boom and subsequent selling pressure.
The analyst projects that the unlocks often leave the supply outnumbering the demand, leading to inevitable spiraling downwards from massive inflation. The early buyers remain engulfed, triggering bearish sentiment in the token community.
Route 2 Fl considers inflation eroding the total value locked within the protocol among the community. The declining TVL often scares the team members and developers, who take off to pursue greener fields.
Reflection on Crypto Altseason in 2024
Route 2 FL observes that altcoins historically pump as Bitcoin’s price rallies. A replication of the past market cycles triggers uptrend steam as investors cash in profit from Bitcoins and rotate into the altcoins.
Route 2 FL considers that over 300 decent projects exist. The colossal number implies that liquidity is insufficient to fuel all altcoins to a rally. The analyst believes that with liquidity challenges, the altcoin season is edging closer.
The analyst ruled out a sustained period of altseason during the present market cycle. Route 2 Fl indicates that things seem different in this cycle and wonders about the parties that will buy all the altcoins.
Route 2 FL considers that token launches will always struggle in the long term unless the altcoins attract institutions and retail investors in masses, ending in a forever player-versus-player contest.
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