In the wake of the U.S. Consumer Price Index's January release, the cryptocurrency market experienced a significant downturn. Both Bitcoin and altcoins fell sharply as concerns mount over rising inflation and potential Federal Reserve measures to control it. There's speculation that any central bank intervention could accelerate a sell-off in equities and cryptocurrencies, further impacting top altcoins.

Over the past two weeks, altcoins have collectively lost $234 billion, marking one of the largest drawdowns in recent history, according to Glassnode data. Ethereum, for instance, has dropped below $3,000, a decline of over 40% from its 2024 peak.

Other altcoins such as Polkadot, Cardano, and Dogecoin have also posted substantial declines. Despite the pressure, Bitcoin has shown relative resilience compared to its altcoin counterparts, maintaining stability despite recent dips.

Additionally, the altcoin market's troubles have been exacerbated by the popularity of meme coins, facilitated by platforms like SunPump and Pump.fun. The total market capitalization of meme coins surged to over $120 billion at one point, driven by explosive gains from coins like Trump, Pepe, and Dogecoin. Some meme coins saw astronomical gains, such as TRUMP, which soared from $4 to $72 at its peak.

The rise of meme coins hints at a shift in how capital is allocated within the crypto market. Launchpads like Pump.fun have encouraged a focus on high-risk, high-reward investments, diverting attention from traditional altcoins. This trend suggests a shift in investor preference towards speculative meme coins, potentially due to regulatory pressures from bodies like the SEC, which have targeted certain altcoins as unregistered securities.

The change in capital flow has benefited meme coin issuers, with many raking in substantial profits without extensive technical requirements. Meanwhile, the altcoin market continues to grapple with declining investments as funds are channeled to riskier, yet potentially more lucrative, meme coin ventures.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or legal advice. Always conduct your own research or consult a professional when dealing with cryptocurrency assets.