Crypto analyst Miles Deutsche recently presented his opinion on a “fundamental flaw” that he believes is causing altcoins to lag behind in the current market era.
In a publication on Twitter on June 18th, Deutsche explained that the issue is related to the mass influx of venture capital (VC) into the crypto space in 2021, which has recently surged again.
He believed that the launch of something new from this wave of VC funding has led to significant growth in all new crypto startups. “The total volume of crypto tokens has increased threefold between 2021 and 2022,” he said. Following the subsequent bear market, many companies postponed the launch of their cryptocurrencies. For Deutsche, “launching a project in bear market conditions is equivalent to a death sentence.”
After the market started to rise again in the fall of 2023, the postponed projects were launched and flooded the market to a large extent. He also noted that “in just the past two months, various individuals have created over 1 million new coins.” The significant issuance of new tokens has led to what he describes as “altcoin dispersion,” similar to hyperinflation in traditional economies. He also explained, “If more tokens are created, it reduces the purchasing power of the cryptocurrency compared to other currencies (like the US dollar).”
Despite strong interest, Andrew Tate’s cryptocurrencies still fell nearly 20%.
The ongoing selling pressure, combined with the lack of fresh market capital, has led to altcoins significantly underperforming BTC.
The analyst also warned that retail investors are being deterred from the market because they feel they cannot win. He stated, “The distortion in private markets is one of the biggest (and most damaging) problems in crypto, especially compared to other markets like stocks and real estate. This distortion becomes a problem because retail traders feel like they can’t win. And if they feel like they can’t win, they won’t participate in the game.”
New projects often start with high market caps, leaving limited room for price discovery and slowly draining capital as private investors unload their tokens.
However, Deutsche believes that the future of the crypto market is certainly bright despite these difficulties. He is convinced that “the market will always self-correct and adapt” and that a more retail-friendly market will benefit everyone.