The cryptocurrency market continues to perform poorly. Andrew Kang, Co-founder and Partner of Mechanism Capital, stated today that he believes over 98% of altcoins have peaked in this cycle, with only a few still having the potential to reach new highs. He also pointed out that Bitcoin may drop back to $40,000.
Cryptocurrencies have been on a downward trend, with Bitcoin falling below $54,500 today, a decrease of nearly 30% from its all-time high of nearly $74,000. Ethereum has also dropped below $2,850, while many altcoins have hit new lows. Andrew Kang, Co-founder and Partner of Mechanism Capital, expressed his thoughts on this matter, stating that he believes more than 98% of altcoins have reached their peak in this cycle. Only a few may reach new highs in the fourth quarter of 2024 or the first quarter of 2025. However, he sees Bitcoin as transitioning into a supercycle asset, retaining characteristics from previous cycles and becoming a more mature macro asset.
In response to inquiries about meme coins, Andrew Kang stated that meme coins make up a significant portion of the few altcoins that still have the potential to reach new highs. However, due to the thousands of meme coins available, investments in this area require careful selection.
Regarding whether SOL can reach new highs, Andrew Kang stated that he estimates Bitcoin may drop back to $40,000. Previously, in early July, Andrew Kang warned that most market participants were not aware of the severity of a potential 4-month decline in Bitcoin’s volatility range. The closest comparison to the current situation is the range in May 2021 when Bitcoin and altcoins experienced parabolic increases.
Andrew Kang pointed out that the current market has a leverage scale of over $50 billion, close to its historical high (excluding CME). However, the duration of this upward trend is 18 weeks, longer than the 13 weeks of the previous bull market, and extreme washouts have not yet occurred. During the bull market period from 2020 to 2021, the market experienced several extreme washouts.
Andrew Kang initially predicted that Bitcoin would reach a low point of $50,000, but this may have been too conservative. The market may see a more extreme pullback to the $40,000 range, which could cause significant damage and potentially require several months of oscillation or downward trends before a possible reversal.
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