Here’s my theory on why altcoins haven’t risen to their previous highs, despite Bitcoin hitting new all-time highs, is the massive increase in the number of cryptocurrencies in circulation. According to CoinMarketCap, the number of coins has increased from 10,000 in 2021 to 20,000 in 2023, and that’s not counting meme coins.
This inflation in the number of coins has a huge impact on the altcoin market. When a fixed amount of money is available to invest in the cryptocurrency market, it is distributed across a larger number of coins, reducing the amount each coin gets. For example, if $100 is distributed across 10 coins, each coin gets $10. But if the same amount is distributed across 100 coins, each coin gets only $1.
This means that altcoins receive less investment, making it harder for them to rise in value. In addition, new coins are constantly being issued, which increases the distribution of investments and makes it difficult for any altcoin to gain enough momentum to reach high levels.
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