A top analyst who nailed the end of the 2021 Bitcoin (BTC) bull market is detailing the mechanics behind the latest altcoin meltdown.
Pseudonymous crypto strategist Pentoshi tells his 779,400 followers on the social media platform X that momentum is what moves markets.
According to the analyst, the crypto markets were launching new altcoins at such a high rate that it depleted demand and allowed momentum to swing over to the other side.
“I think for the most part it was simple supply vs. demand dynamics.
We got to the point where there were a lot of new coins launching daily and each one needed more and more liquidity to support it. At one point, it needed around $200 million a day of new money inflows to support current prices
So supply overwhelms demand and because everyone is all in, there’s not enough passive bid and demand in the books or liquidity and we get these violent moves down.
We reached a point of balance and then the other team took over temporarily.”
TOTAL3, which traders use to track the value of the altcoin markets, dropped from its 2024 high of $788.85 billion to as low as $563.85 billion, representing a decrease of about 30%.
Even amid the marketwide correction, Pentoshi highlights that the crypto bull market is still intact.
“This isn’t the macro top, in my opinion, just a local one.
The bull market always ends when supply essentially becomes infinite and there’s nobody left to buy. We aren’t there yet in my, opinion. Good luck and happy pickings over the next few weeks.”
Looking closer at TOTAL3, the widely followed analyst shares a chart suggesting it will hold support at around $600 billion before recovering and rallying to a $1 trillion valuation.
“All in all, I think this is the beginning of a great and new opportunity. What would change that is if BTC lost market structure or we had heavy BTC outflows from exchange-traded funds (ETFs). We’ve yet to see that, and it can happen. They go both ways.
For now, this is just one of a few 30%+ corrections we should have along the way if it’s anything like previous cycles.”
At time of writing, TOTAL3 is trading at $620 billion.
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