The high risk, high reward theory of altcoins may lean towards the theory

The high-risk, high-reward theory of altcoins may lean toward the former, as big gains are now less likely due to weak narratives driving the cryptocurrency market, crypto analysts say.

“While there are tactical opportunities, the era of 100x returns may be behind us,” Markus Thelen, head of research at 10xResearch, told Cointelegraph.

He warned that although the market is anticipating a bull market for altcoins this year, “retail participation remains weak, and few new projects have emerged that attract non-native crypto traders.”

Previous altcoin bull markets had “distinctive characteristics” that attracted more money, but this cycle has seen “tighter capitalization, as evidenced by a decline in the total value locked and a scarcity of venture capital investments,” Thelen said.

“In the last cycle, the narrative that cryptocurrencies can replace traditional financial systems was widely embraced, but the narratives of this cycle are shorter-lived and lack significant support,” Thelen added.

Earlier this week, Solana-based memecoin GameStop (GME) — which is not affiliated with the video game retailer — soared 2,727% along with a surge in GameStop’s stock price after trader Keith Gill posted a meme of his “Roaring Kitty” account. “X for the first time. In nearly three years.

GameStop stock briefly rose 2,727% amid a surge in GameStop’s stock price. Source: CoinMarketCap

The founder of trading consultancy MN, Michael van de Poppe, claimed in a May 16 post that a portfolio containing mainly altcoins poses a “relatively huge” risk.

“What’s the downside to this bet? It’s relatively huge. At press time, the total investment has already dropped by 20% within one to two weeks.

Despite the risks involved, Van de Poppe explained that he recently sold all of his Bitcoin (BTC) to switch to altcoins, claiming that he “could lose between 50 and 80%.”

However, cryptocurrency investor Fabio Andreatta doubts that there will be an “alternate season.”

Related: Altcoins will bottom in early summer before rallying – Analyst

“All you have done is increased your risk,” Andretta said in response to Van de Poppe’s X post. “It is unlikely to outperform Bitcoin. Most altcoins will never reach their ATHs again.”

Bitcoin’s dominance – its market share compared to the rest of the cryptocurrency market – shows that the broader market has shifted capital away from altcoins.

Bitcoin dominance is near all-time highs year to date, currently standing at 56.05%, up 2.12% over the past seven days, according to TradingView data.

magazine: Buy altcoins now, but sell before “mid-2025”: Charles Edwards, X Hall of Flame

This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.

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