Crypto Analyst Unveils Reasons Behind Latest Altcoin Crash, Forecasts Rebound

The pseudonymous crypto strategist Pentoshi, known for accurately forecasting the end of Bitcoin’s bull market in 2021, has provided insights into the recent downturn in the altcoin market. On Friday, he shared his perspective on X, formerly Twitter, attributing the altcoin crash to simple supply and demand dynamics coupled with losing momentum.

Pentoshi explained that the frequent launches of new altcoins diluted demand, leading to a scenario where around $200 million per day in new money inflows was necessary to sustain current prices. This saturation ultimately caused supply to outpace demand, resulting in sharp market declines.

“We got to the point where many new coins were launching daily, and each one needed more and more liquidity to support it. At one point, it needed around $200 million a day of new money inflows to support current prices,” Pentoshi said in a post highlighting the imbalance that precipitated the crash.

Crypto Bull Market: Pentoshi Remains Optimistic Amid Correction

Pentoshi was also bullish on the remainder of the crypto bull market despite the notable correction and decline. Thus, Armstrong underlined that, in his opinion, the correction is not due to a global factor. It was merely the result of a local top. From that point of view, the current correction does not signify the exhaustion of all buyers, which usually means that the end of the bull market cycle has come.

“We reached a point of balance, and then the other team took over temporarily,” Pentoshi added, implying that the current downturn is a temporary setback in the broader upward trajectory of the market.

Pentoshi analyzed the TOTAL3 index to substantiate his data, which was created to follow the altcoin market. His study found that the cryptocurrency plummeted 30% from its $788.85 billion peak in 2024 to a low of $563.85 billion. On the other hand, he did not lose hope that the decline was just a temporary one-off event rather than a major market correction.

Moreover, the author shows how supply and demand fluctuations in the altcoin market can even lead to corrective cycles during a long bull stage. His evaluation indicates that the recent downturn, though notable, does not necessarily entail the end of the current bitcoin bull market cycle.

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Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.

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