The cryptocurrency market has been plagued by a significant issue, hindering altcoins from reaching their true potential. According to crypto analyst Miles Deutscher, this "major fundamental flaw" stems from the influx of venture capital funding in 2021, which led to a surge in new crypto projects. As a result, the total crypto token count tripled between 2021-2022, causing a flood of new tokens in the market.

Deutscher's report highlights that over 1 million new crypto tokens have been launched since April alone, leading to "altcoin dispersion," a phenomenon akin to inflation in traditional economies. This oversaturation of the market has resulted in reduced purchasing power for cryptocurrencies relative to other currencies like USD. With an estimated $150m-$200m of new supply pressure daily, altcoins are struggling to keep up with Bitcoin (BTC).

The analyst warns that retail investors are being driven away from a market they cannot compete in, as new projects launch with high market caps, leaving little room for price discovery. This has led to a bleak outlook for altcoins, with a recent market crash resulting in significant losses for crypto bulls.

Despite these challenges, Deutscher remains optimistic about the future of the crypto market, believing that it will self-correct and adjust. Some analysts see opportunities for altcoins, urging traders not to get shaken out. However, it is crucial to acknowledge that investing in cryptocurrency carries risks, and investors should exercise caution and due diligence.

In summary, the crypto market faces a significant obstacle, but understanding this issue can help unlock the full potential of altcoins. By recognizing the challenges and opportunities, investors can make informed decisions and navigate the complex landscape of cryptocurrency investing.