Altcoins Need ‘Real Bull Market’ To Avoid VC Funding Drought – Analyst

If crypto projects are to continue to receive healthy venture capital funding, the altcoin market needs to see a significant rally, says one crypto analyst.

Unless altcoins see a “significant bull market,” few crypto projects will be funded, which will result in record lows in the altcoin market, Reflexivity Research co-founder Will Clemente said in a Sept. 12 X post.

Clement expects a “dispersion” of funds.

However, Clement doubts the altcoin market's chances of achieving such a rally.

“With the amount of supply coming into the market, I expect a breakout and I'm not sure that will happen,” he wrote.

CoinMarketCap says it tracks more than 8,000 cryptocurrencies and it's difficult to know the “exact number” of tokens in existence.

As Clement explained, the high level of investment in altcoins — high-risk, high-reward assets — is falling below market performance levels.

“My point is that by allocating too much to ‘beta', too much money is now being allocated to funds that are clearly underperforming.”

As traders and analysts question whether the altcoin market will experience a rally similar to those seen in previous market cycles.

James Check, lead analyst at Glassnode, argued that it won't happen as expected because new crypto traders will rush to buy highly speculative assets too soon.

“The joke's been told, everybody knows the punchline, and they go straight to the punchline, and it's not funny anymore,” Czech said on the Aug. 29 Rough Consensus podcast.

Other analysts remain optimistic.

However, other crypto traders are showing more optimism for the altcoin market.

“Some specials are doing well, so we're starting to show some momentum,” MN Trading founder Michael Van de Pop said in a Sept. 12 X post.

Related: ‘No Clear Trigger' for Bleeding as Top Altcoins Fall Double-Digit

“I don't think September will be any worse. I think we will gradually speed up from here,” Van de Pop added.

“Altcoins are undervalued. I'm buying,” added the pseudonymous crypto trader Mr. Crypto.

Meanwhile, Bitfinex analysts noted that despite Bitcoin's recent decline, altcoins have remained relatively strong, suggesting that investors are adjusting how they protect their capital during market volatility.

“The shift signals a regime change where investors are exploring the value in altcoins, diverging from the normal flow into bitcoin,” the analysts said on September 9.

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This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.