This is why altcoins are outperforming Bitcoin during this market cycle

Crypto analyst Miles Deutscher just recently presented an opinion about a "major fundamental flaw" that makes him believe that altcoins are lagging behind in the current market era.

В publication at X (Twitter) on June 18 Deutscher explain , that the issue is related to the massive venture capital (VC) financial inflow into the crypto space in 2021, which has recently picked up again.

He opined that the launch of something new from this wave of VC funding has caused significant growth in all new crypto startups. "Total crypto token money volume increased 3 times between 2021 and 2022.", he said. In the bear market that followed, many businesses delayed their cryptocurrency launches. For Deutscher, "starting a project in the conditions of a bear market is tantamount to a death sentence".

After the market went up again in the fall of 2023, the delayed projects were launched and largely flooded the market. He also noted that “in the last two months alone, over 1 million new coins have been created by various people". The significant issuance of new tokens has led to what he describes as “altcoin variance', just like the hyperinflation of traditional economies. He also explained: "If more tokens are created, this in turn reduces the purchasing power of the cryptocurrency against other currencies (such as the US dollar)." 

Continued selling pressure coupled with a lack of fresh capital in the market has seen altcoins significantly underperform BTC.

The analyst also warned that retail investors are being pushed away from the market because they don't think they can win. He stated:

“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 retailers feel they cannot win. And if they feel like they can't win, they won't be in the game."

New projects often launch with high market caps, which leaves limited room for price discovery and slowly drains capital as private investors divest themselves of their tokens.

However, Deutscher believes that the future of the crypto market despite these difficulties is certainly bright. He believes that "the market will always self-correct and adjust" and that a more retail-friendly market will benefit everyone.