The cryptanalyst known for accurately predicting the end of Bitcoin BTC/USD The bull market in 2021 has shared information about the recent downturn in the altcoin market.
On Friday, pseudonymous crypto strategist Pentoshi shared his opinion on X, formerly known as Twitter, that the recent drop in altcoins can be attributed to a simple supply and demand dynamic combined with a loss of momentum.
Pentoshi explained that the frequent launch of new altcoins diluted demand. This saturation led to a scenario in which around $200 million a day in new inflows of money were needed to sustain current prices.
In the end, supply exceeded demand, causing sharp declines in the market, he said.
“We got to the point where many new coins were being launched daily and each one needed more and more liquidity to support them. At one point, around $200 million per day of new money inflows were needed to support current prices,” Pentoshi said in a publication highlighting the imbalance that precipitated the accident.
Despite this major correction, Pentoshi remained optimistic about the health of the overall cryptocurrency bull market.
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He stressed that the slowdown represents a local top, not a macro one, and suggested that the market is far from reaching a point of “infinite supply” with no buyers, which typically signals the end of a bull market.
“We broke even and then the other team took over temporarily,” Pentoshi added.
Pentoshi's analysis of TOTAL3, an index that tracks the value of the altcoin market, showed a drop of about 30% from its 2024 high of $788.85 billion to a low of $563.85 billion.
However, it anticipated support of around $600 billion and predicted a rally to a market valuation of $1 trillion.
“In my opinion, this is not the macro top, but only local,” added Pentoshi.
However, he cautioned that a change in this outlook would depend on significant changes, such as the loss of Bitcoin market structure or substantial outflows from Bitcoin ETFs.
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