According to a recent post by K33 Research, altcoins still offer investors windows of ‘easy gains,’ but trading is becoming more challenging as more tokens appear daily.

Moderate capital inflows and the explosive proliferation of altcoins are two primary factors reshaping the altcoin market.

Stablecoin supply still recovering

The current $182 billion stablecoin supply in the crypto market is still below the level of the previous cycle when it peaked at $188 billion. Additionally, the usage of stablecoins in the current cycle is less speculative. 

In 2022, the hype around Terra Luna’s UST drove a bullish speculative mania that increased the price of different altcoins. However, fiat-backed stablecoins dominate today, focusing on real-world applications such as Stripe’s $1.1 billion acquisition of Bridge. 

While this utility-driven growth is a positive development, it has a diminished impact on creating a speculative, risk-on environment for altcoins.

Millions of new tokens

Simultaneously, new token launches are flooding the market. Platforms like Pump.fun have facilitated the creation of over 3 million memecoins this year alone. Ethereum and its layer-2 networks also contributed significantly, with over 1 million new tokens launched during the summer. 

The explosive growth in supply, paired with moderate capital inflows, creates a more challenging environment for traders, who have limited resources to chase an ever-expanding pool of tokens.

As a result, many top-ranked altcoins remain in negative territory year-to-date, even as Bitcoin’s bull trend since late 2022 has set a broadly risk-on tone for the crypto market.

Despite these headwinds, K33 highlighted that the Republican victory in the US elections has created favorable conditions for another wave of “easy money” in altcoins. This momentum has primarily benefited memecoins, an enduring theme this cycle.

While the market phase with explosive growth in altcoin prices — known as ‘alt season’ — has yet to materialize, the post pointed out that altcoin trading remains a cyclical game that will continue generating opportunities for gains.