Mile presents a compelling argument for why altcoins are struggling in the current market cycle. He identifies the main issue as an imbalance between supply and demand, largely driven by the private investment market and token launches.
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According to Miles, the problem stems from the 2021 bull run, when venture capital (VC) investments in crypto projects reached unprecedented levels. Many of these projects, which raised funds during the peak, delayed their launches due to the subsequent bear market. As market conditions improved in late 2023 and early 2024, these projects finally began launching their tokens.
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This led to a flood of new altcoins entering the market in a short period. Miles points out that the number of crypto tokens has increased dramatically, with nearly 2.5 million tokens in existence by 2024, compared to just 443,000 in 2021. Many of these new tokens were created between 2023 and 2024, with a significant portion launching in 2024 alone.
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The influx of new tokens has created what Miles calls "crypto's version of inflation." The increased supply of altcoins is outpacing the demand from new investors entering the market. This supply-demand imbalance is putting downward pressure on altcoin prices, even as the overall crypto market cap increases.
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Miles suggests that for the altcoin market to improve, there needs to be a shift towards more liquid funds in the crypto space, rather than relying heavily on VC investments. He also advises investors to look for projects with clear narratives, unique selling points, clever tokenomics, strong communities, and low inflation rates when selecting altcoins to invest in.
In conclusion, Miles emphasizes that understanding these market dynamics is crucial for investors to navigate the current crypto cycle successfully. He believes that the market may be shifting, with retail investors becoming more aware of these issues and potentially forcing projects to launch at lower valuations in the future.
