The prevailing error among many crypto participants is relying on past cycles as a blueprint for future altcoin rallies.

Why the 2020–2021 model no longer applies

The structure that powered the 2020–2021 altcoin surge has changed materially, so repeating that sequence requires different conditions than before.

Factors that supported the prior model, such as concentrated retail momentum and specific liquidity flows, are less predictable in the current cycle.

Who actually removed liquidity from altcoins

Liquidity withdrawal from alternative tokens came from a combination of reallocated capital, shifting market participants and altered on‑chain behaviour.

• Capital rotation toward perceived safer assets reduced speculative funding available to smaller tokens.
• Market participants with large positions adjusted exposures, compressing depth in many altcoin order books.
• Protocol-level changes and staking dynamics redirected tokens off exchanges, changing usable liquidity pools.

Why price action may hurt before any recovery

Before a sustainable broad-based rally, markets can undergo drawdowns as liquidity rebalances and participants de-risk positions across sectors.

Episodes of concentrated selling or low on‑chain activity can intensify losses for less liquid tokens even when macro sentiment improves.

Practical steps for those who want to avoid being left behind

Rather than waiting for historical patterns to repeat, assess on‑chain metrics, liquidity depth and participant composition to inform position sizing.

Risk management and flexible allocation, tied to observable market structure changes, reduce the chance of being caught in unmet expectations.