Short-Term Profit Seekers Flee Overvalued Hype Coins, Sparking Sell-Off

Amid the bearish trend rocking the altcoin market since the start of the new year, a crypto analyst has spotted a noteworthy pattern in the downward trajectory of some tokens that fit into a specific category.

In a recent tweet, crypto analyst VIKTOR called attention to an observation from the January 3 market turbulence, wildly dubbed “liquidation day.” VIKTOR highlighted that while most altcoins experienced a substantial downturn of approximately 30%, he pointed out a distinctive trend among specific tokens that saw even more significant drops.

Specifically, he noted that sensational coins such as BIGTIME, Pyth Network (PYTH), MEME, TOKEN, Worldcoin (WLD), and Jito (JTO) exhibited giant red candles with over 40% decline.

According to VIKTOR’s analysis, what sets these tokens apart is their shared characteristic of being relatively new market entrants, coupled with their high full diluted valuation (FDV) relative to their float.

VIKTOR’s observation suggested these tokens were more susceptible to pronounced market fluctuations, as evidenced by their sharper liquidation-day declines. When pressed for further explanation regarding the factors contributing to the observed sell-off, the analyst argued that short-term holders could merely be seeking quick profits from the tokens.

Moreover, VIKTOR pointed out that the absence of a substantial price history for the new coins may also contribute, as market participants lack a clear reference point or fair value for the assets.

Furthermore, another X user highlighted a peculiar characteristic shared among the tokens BIGTIME, PYTH, MEME, TOKEN, WLD, and JTO. The commenter asserted that these tokens exhibit a more robust presence in perpetual contracts when compared to spot holders.

The observation seeks to emphasize that a significant portion of these tokens’ trading activities is concentrated among market participants speculating on their price movements rather than those who possess the actual assets.

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