CryptoQuant CEO: ‘Altcoin Liquidity is Dwindling’

CryptoQuant CEO: ‘Altcoin Liquidity is Dwindling’ – This is the Key to Survival

The crypto market might be poised for another downturn in 2026, similar to previous cycles, before a potential bounce back. As many altcoins have already seen declines of 70%-90% from their late-2024 highs, this trend could severely impact the market segment. Ki Young Ju, the CEO of CryptoQuant, asserts that only tokens that can secure new liquidity through digital asset treasuries (DATs) or exchange-traded funds (ETFs) are likely to survive this tough environment. He emphasized, “Altcoin liquidity is drying up. If your altcoin is not playing the liquidity game, its long-term risk is likely high.”

Key Takeaways

The crypto market may face declines in 2026, with many altcoins already down significantly.
Ki Young Ju from CryptoQuant mentions that only tokens with liquidity through DATs or ETFs have a chance of surviving.
Critics are skeptical about the stability of DATs amidst market volatility.
Recent trends show varied performance among altcoins, influenced by their association with DATs and ETFs.
The recent downturn has resulted in a significant loss of over $600 billion in the altcoin market.

CryptoQuant CEO: 'Altcoin liquidity is drying up' - THIS is the only chance of survival

altcoins

The Impact of Liquidity and DATs

Critics claim that some digital asset treasuries (DATs) are being used by venture capitalists (VCs) to hedge against their altcoin positions and may quickly sell off in the event of a market crash. While this discussion has been ongoing, limited data indicates DATs can rapidly liquidate assets to maintain their market-to-net-asset-value (mNAV), or value assessment relative to their crypto holdings.

For instance, SharpLink recently sold off millions of dollars in Ethereum (ETH) to repurchase shares and maintain its mNAV. A similar concern is present regarding Strategy, the largest public company that holds Bitcoin (BTC) amid a declining mNAV.

Furthermore, the ETF landscape is not solely a beacon of hope. In November, U.S. spot BTC ETFs experienced a significant outflow of $3.5 billion, restricting Bitcoin's recovery prospects. Essentially, while DATs and ETFs could provide essential demand, they may also create selling pressure during a market downturn.

Performance of Altcoins

Altcoins

Source: Select altcoin performance (TradingView)

Performance among altcoins will vary significantly. Notably, Solana (SOL) has seen a year-to-date decline of 32%, while Ethereum (ETH) has dropped by just 16%. Both cryptocurrencies have the advantage of DATs and ETFs. In contrast, Cardano (ADA) has plummeted nearly 60%, while Bitcoin Cash (BCH) has notably risen by 16%. Neither of these assets has access to DATs or ETFs.

As of now, the crypto market has lost over $600 billion in value, particularly in altcoins, during the Q4 downturn. The altcoin season index has fallen to 24, indicating a strong preference for BTC during this period.

Altcoins

Source: CoinMarketCap

Concluding Thoughts

The situation for altcoins is precarious, with liquidity drying up and many tokens facing severe risk. For altcoins looking to thrive, establishing new liquidity streams through DATs or ETFs could be essential for their survival in a challenging market landscape.