“The recent intense volatility in altcoins is essentially the result of a combination of declining macro risk appetite and tightening on-chain liquidity,” Tim Sun, senior researcher at HashKey Group, told Decrypt.
Sun also noted that altcoins typically have shallow market depth and high concentration of holdings. During periods of liquidity contraction, market makers and short-term speculative capital are more inclined to profit by pumping prices and then distributing, which reinforces the pattern of sharp rises and falls.
Looking aheadAll eyes are now on Bitcoin, which could make or break the current outlook.
"If for any reason it is not, which is highly unlikely, then the 'Shootin' Starts,' bigger, and better, and stronger than anyone has ever seen before," he added.
