Alphractal, a leading cryptocurrency analysis firm, has published information regarding the current state of the cryptocurrency market.
According to the company, the number of active altcoins listed on CoinMarketCap dropped by 400, indicating a decrease in public interest.
This decline is largely attributed to the significant decline in altcoin trading volume on exchanges, which currently averages $100 billion, much lower than the $400 billion recorded in December 2024.
Despite this, Alphractal suggests that decreasing trading volumes will not necessarily prevent future price increases in altcoins. Historical trends show that altcoins have reached all-time highs even when trading volume has not peaked, as seen in 2021.
Alphractal CEO Joao Wedson stated that new incentives are needed in the cryptocurrency market. Wedson stated that, unlike the peak enthusiasm in 2017 and 2021, the current market is facing slow growth and lack of investor confidence. Wedson also identified the significant decline in investments in Web3 startups as a major contributing factor:
- 2021: $33 billion worldwide
- 2022: $7.1 billion raised despite “crypto winter,” signaling an early slowdown.
- 2023: Less than $7 billion raised, a 74% decrease from 2021. According to Crunchbase, $1.7 billion was raised in the first quarter alone, the lowest amount since late 2020.
This decline in Web3 investments outpaced the downturn in the overall Venture Capital (VC) market, which saw a 38% decline between 2021 and 2023.
Wedson pointed out several key reasons for the market slump:
- The collapse of FTX and the resulting loss of confidence in the industry.
- Regulatory uncertainties in major cryptocurrency markets.
- Shifting investor focus to Artificial Intelligence (AI), which is set to attract around $50 billion by 2023.
Despite these challenges, Wedson remains optimistic about the potential for a resurgence in crypto investment, believing that the combination of AI, crypto, and gaming-themed cryptocurrencies could be the next big driver of institutional capital.
Alphractal’s latest observations show that Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and Cardano (ADA) have accumulated more long positions than short positions over the past week, suggesting that the market could experience higher volatility early next week.
*This is not investment advice.
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