Many coins are launched not for the benefit of investors or speculators (or the wider economy) but simply for miners to mine and sell and make a profit.
Most miners belong to mining pools which automatically switch them to mine the most profitable coin. They will typically use a site like Coinchoose or Coinwarz to make their choice.
These sites compare the reward (the coins per block valued at the current price on Cryptsy), with the Network hashrate. If the hashrate is relatively easy, but the reward in terms of BTC value is high, the coin moves up the chart.
Here's a screenshot of Coinchoose as at the time I wrote this post:
That meant that all the mining pools were concentrating on it, and selling the coins as soon as they got them. Recall that in my previous post (on which coins were being searched for) I showed how interest in dogecoin was waning according to Google Trends, and how this was correlated with a price drop. Mining pools concentrating on the coin is another indicator.
Miners are not a problem but mining pools are. The coins are going to be mined by someone - our question is "will the miners hold or will they dump". Miners who are mining because they are fans of a coin will typically hold onto them because they think it's an investment. The mining pools however tend to dump the coins as soon as they get them. Therefore if a coin is at the top of coinchoose or coinwarz, then a lot of the newly mined coins will end up on the exchanges. If the coins are coming onto the exchanges faster than new interest in buying them, the price will drop.
Coins lower down the table on Coinchoose and Coinwarz are being mined out of love or loyalty and are less likely to be dumped.
If you found this page useful, please leave a tip!
Method 1: Looking for altcoins with a big community
Method 2: Which coins are being searched for?
Method 4: Which coins have an ecommerce economy?
Method 5: The Daily Maintenance Cost
Method 6: How Pumps and Dumps Work
Method 7: Trading Thunderclaps
Method 8: Trading Block Reward Halvings