The crypto analyst known for accurately predicting the end of That of Bitcoin Bitcoin/USD bull market in 2021 shared insights into the recent downturn in the altcoin market.
Friday, pseudonymous crypto strategist Pentoshi shared his view on X, formerly known as Twitter, that the recent collapse of altcoins can be attributed to simple supply and demand dynamics combined with a loss of momentum.
Pentoshi explained that the frequent launch of new altcoins has diluted demand. This saturation has led to a scenario where approximately $200 million per day in new money inflows would be needed to support current prices.
Eventually, supply exceeded demand, leading to sharp market declines, he said.
“We got to the point where tons of new coins were being launched every day, and each one needed more and more liquidity to support it. At one point, around $200 million a day in new money inflows were needed to support prices current,” Pentoshi Lo said in a post highlighting the imbalance that caused the collapse.
Despite this significant correction, Pentoshi remained optimistic about the health of the cryptocurrency bull market overall.
Also Read: Crypto Markets Slump Following Iranian Drone Attack on Israel, Investors Warn of Continued Sell-Off
He emphasized that the recession represents a local, not macro, top and suggested that the market is far from reaching a point of “infinite supply” with no buyers left, which typically signals the end of a bull market.
“We reached a point of equilibrium and then the other team took over temporarily,” Pentoshi added.
Pentoshi’s analysis of TOTAL3, an index that tracks the value of the altcoin market, showed a decline of around 30% from the 2024 peak of $788.85 billion to a low of $563.85 billion.
However, he predicted support of around $600 billion and predicted a rebound to a market valuation of $1 trillion.
“This is not the macroeconomic maximum, in my opinion, but only local,” Pentoshi added.
However, he cautioned that a change in this outlook would depend on significant changes, such as the loss of Bitcoin’s market structure or substantial outflows from Bitcoin ETFs.
Now read: Amid Dogecoin Collapse, 374 Million DOGE Fled From Robinhood To An Unknown Wallet
Photo: Shutterstock