Crypto analysts predict a deeper altcoin crash as market liquidity remains tight. | Credit: Marc Asensio/NurPhoto via Getty Images.
Share
Key Takeaways
Crypto liquidity remains tight, with Bitcoin as the only asset seeing strong market demand.
An analyst warns that many altcoins could see an 80% drop after listing on exchanges.
The liquidity crisis may persist until late 2025 or 2026, delaying any meaningful altcoin recovery.
The cryptocurrency market is grappling with a deepening liquidity crunch, marked by declining trading volumes and thinning market depth.
While Bitcoin (BTC) remains resilient, altcoins are facing conditions reminiscent of the pre-COVID-19 era, when illiquidity led to extreme volatility and suppressed price growth.
Now, analysts warn that this crisis may persist for another year or more, casting doubt on any near-term altcoin revival.
Liquidity in crypto markets depends on active buying and selling. Higher participation generally improves liquidity and supports price stability. However, according to crypto analyst AB KuaiDong, liquidity remains tight across the board—except for Bitcoin.
In a post on X, he pointed to a key reason: the emergence of high Fully Diluted Valuation (FDV) altcoins.
Many projects raised funds at sky-high valuations in previous cycles, and their token sales were priced accordingly.
Now, to prevent early investors from selling at a loss, these projects are forced to list their tokens at inflated prices—keeping real demand low and creating artificial selling pressure.
“The reason why these projects are forced to issue coins with high market value is mainly because the last round of valuations was too high, and the cost price when selling nodes or tokens to the community was too high, which resulted in them having to open the market at a price higher than the cost price.” He highlighted.
Altcoins Continue to Bleed
Recent altcoin launches validate this trend. Between 2023 and 2024, projects like Ethena (ENA), LayerZero (ZRO), Celestia (TIA), and Hyperliquid (HYPE) entered the market—many backed by venture capital (VC) firms and debuting with massive valuations.
While some initially surged to new all-time highs, most are now far below their peaks.
Celestia (TIA): Down 84% from its all-time high.
LayerZero (ZRO): Down 62% from its peak.
Ethena (ENA): Down 68% from its high.
Hyperliquid (HYPE): The only altcoin showing relative strength.
Altcoins Market Cap | Credit: TradingView
At the same time, Bitcoin’s dominance has surged to 61% despite the price struggling to hold above $100,000. Meanwhile, altcoin dominance has dropped by 19% year-to-date—a sign that capital is fleeing riskier assets.
Should the crypto liquidity crunch on altcoins continue, then it is unlikely for these non-BTC assets to experience a sustained rally before the end of this cycle.
VC-Backed Tokens Are Taking the Hardest Hit
KuaiDong believes the worst may not be over for altcoins, particularly those backed by VCs.
He predicts that newly listed tokens on Binance, Bybit, and other major exchanges could see price declines of 80% or more post-listing.
Performance of Altcoins Listed on Binance in 2024 | Credit: Coin98 Analytics
“The cleansing of VC coins will most likely continue. At the beginning of last month, my colleagues and I advised all project owners to be prepared for a drop of more than 80% after listing. That is, a project with an initial offering of 2 billion may fall to 300 million; a project with an initial offering of 700 million may fall below 100 million.” Dong added.
In line with this position, pseudonymous trader RunnerXBT said the BTC is the only asset worth touching.
“How much more money are you willing to lose on altcoins to learn that there is only BTC worth touching in crypto?” The analyst asked his 80,000 followers on X.
Will Altcoins Find a Bottom?
For now, KuaiDong doesn’t see relief coming anytime soon. He expects the current trend to last until at least late 2025 or 2026, as funds struggle with poor returns and raising new capital becomes increasingly difficult.
However, he suggested that if the downturn continues on a large scale, it could eventually mark the bottom for altcoins—potentially setting the stage for a long-term recovery.
Until then, the message from analysts is clear: in this liquidity-starved market, Bitcoin remains the safest bet.
Victor Olanrewaju is a crypto analyst and reporter at CCN with deep roots in on-chain research and technical analysis. His crypto journey began in 2017, but it was the 2020 Uniswap airdrop that sparked a full-time pivot into the space.
With a foundation in copywriting, Victor honed his craft creating high-converting content for leading crypto brokers — most notably an XRP price prediction that ranked #1 on Google during the 2021 bull run.
He later joined AMBCrypto in 2022, where he combined storytelling with technical and on-chain analysis to cover key market narratives.
In 2024, he expanded his expertise at BeInCrypto, collaborating with analysts and using tools like Glassnode, Santiment, and IntoTheBlock to break down Bitcoin and altcoin trends.
At CCN, Victor covers the top cryptocurrencies, memecoins, macro shifts, blending real-time insights with deep-dive metrics.
He holds a Bachelor’s degree in Physics from the University of Ibadan, equipping him to simplify complex data for a wide audience. Follow his work or connect on LinkedIn or X.
