- Altcoins face $36B unlock pressure, forcing VCs to sell, limiting fresh inflows.
- Bitcoin dominance restricts altcoin growth until BTC stabilizes and consolidates.
- Speculative capital shifts to meme coins, delaying a broader altcoin recovery.
Altcoins remain under pressure as heavy sell-offs continue, raising concerns among investors. Over the next 12 months, nearly $36 billion worth of altcoins will enter the market. This massive unlock equals around $700 million released weekly, creating relentless downward pressure.
Venture capitalists (VCs) are also struggling, forcing them to offload assets. Despite a rise in new crypto funds, total capital allocation has hit its lowest since 2020. With VCs desperate for liquidity, large-scale selling continues, preventing altcoins from gaining momentum. Additionally, shifting speculative capital and institutional strategies further delay any significant altcoin recovery.
Venture Capitalists Struggle to Exit Positions
VCs played a major role in the previous crypto bull cycle, investing heavily in projects during 2021 and 2022. However, as the market corrected, many of these investments lost value. With fundraising in decline since 2023, firms are now forced to liquidate holdings to recover capital.
Analyst Open4Profit highlights that VCs are in survival mode, selling assets at a loss to maintain cash flow. The pressure from these exits limits fresh inflows into altcoins, prolonging the bearish sentiment.
Why Are Altcoins NOT Pumping? 🔻💀
— Open4profit (@open4profit) February 6, 2025
The $36B Crypto Tsunami Is Coming 👇… pic.twitter.com/RrU1k6KmLX
Bitcoin Dominance Restricts Altcoin Growth
Bitcoin typically absorbs market liquidity before altcoins rally. Historical patterns from 2017 and 2021 show that altcoins gain traction only when Bitcoin stabilizes. Currently, Bitcoin dominance remains strong, forming higher highs and higher lows. This suggests that funds are still concentrated in BTC.
For altcoins to rise, Bitcoin must enter a prolonged consolidation phase, allowing capital rotation. Evgeny Shatov, a partner at Capital Lab, predicts Bitcoin may surge to $115,000–$135,000 before consolidating, potentially triggering an altcoin season. However, until Bitcoin dominance declines, altcoins will likely struggle to gain momentum.
Speculative Capital Flows Into Meme Coins
Crypto analyst Miles Deutscher notes that speculative capital is moving away from major altcoins into low-cap meme coins. Platforms like Pump Fun enable quick meme coin creation, attracting short-term traders. This trend diverts liquidity from established altcoins, delaying a broader altcoin rally.
The launch of Pump Fun is directly correlated to the destruction of the altcoin market vs $BTC. 👇
— Miles Deutscher (@milesdeutscher) February 4, 2025
The reason we've seen no major "alt season" across majors, is because the speculative capital that would've once poured into top 200 assets, instead decided to jump the gun and… pic.twitter.com/g04L2SCar2
The CoinMarketCap Altcoin Season Index currently sits at 37, well below the 75 threshold required for an official altcoin season. This shift in investment behavior results in a high-risk environment, where early adopters see significant gains while latecomers often face losses. Moreover, restrictive SEC regulations limit fair project launches, pushing the industry toward alternative investment models.
