The total market capitalization of altcoins has reached a previous high, but the prices don't seem to reflect this growth. What's happening?
In the context of events in the United States today, the cryptocurrency market has quietly grown with the altcoin sector (measured by the total market capitalization excluding BTC/ETH) reaching its highest level since mid-August when Ethereum broke its previous ATH. Market-cap-based altcoins are currently at the same level as during the market frenzy in 2022; however, when looking at the context of coins that have dropped over 80%, you certainly wouldn't guess that. The main culprit here is easy to infer: there have been tens of thousands of altcoins launched since 2022, many of which have employed the old strategy of "low float high FDV" popular in recent years. $1 trillion allocated to altcoins is now spread across all of these altcoins, rather than being concentrated in a select few.
The remaining piece of the puzzle as I mentioned is the launch trend with very low circulating supply along with a very high fully diluted valuation (FDV). If you pull the price chart of almost any coin launched last year, it may look like they have fallen off a cliff after launch. However, if you choose the Market Cap view, many coins will look like they are actually performing quite well. Take WorldCoin as an example, a company co-founded by Sam Altman with the goal of verifying online users as humans in this evolving world of bots and algorithms. Today, WLD has reached a new all-time high in market capitalization, about 3 times higher than in March 2024. However, its price has dropped about 80% in the same timeframe. Events like this make it really hard for investors and traders to buy into new launches, as even those who were right about the future success of Worldcoin have seen significant declines. If this isn't a wake-up call for teams to change how they launch their tokens, then I don’t know what is.
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