Cryptocurrencies with lower market capitalizations are surging after the flagship cryptocurrency Bitcoin ($BTC) briefly hit a new all-time high before correcting, as investors bet that these “altcoins” are poised to replicate the digital asset’s recent success.
An index tracking the bottom half of the top 100 cryptocurrencies, the MarketVecto Digital Assets 100 Index (MVDA), has risen roughly 60% in the past month, surpassing Bitcoin’s 56% gain, as reported by Bloomberg. This surge coincides with a broader market upswing, with the total value of all cryptocurrencies increasing by over $800 billion.
Market analysts attribute this shift to a growing trend of investors diversifying their portfolios beyond Bitcoin, seeking potentially higher returns from smaller, less established tokens.
Bitcoin’s price has been outperforming the wider cryptocurrency market, fueled by the launch of U.S. exchange-traded funds (ETFs) and an upcoming reduction in its supply growth through its upcoming halving event, which will cut coinbase rewards miners receive per block found in half.
While some altcoins remain far below their all-time highs, their recent performance suggests a potential decoupling from Bitcoin’s dominance. Analysts like Vetle Lunde, from K33 Research, believe this trend often coincides with periods of rapid market growth.
The surge in Bitcoin’s derivatives market, indicated by high futures costs and record open interest at the CME Group, is also seen as a positive sign for altcoins. Meme coins like Shiba Inu and WIF have indeed witnessed explosive gains in recent days, exceeding 150% in some cases and with SHIB specifically soaring over 300% in a week.
As CryptoGlobe reported, a prominent crypto strategist has forecasted a potential surge in the value of alternative cryptocurrencies, often referred to as altcoins, surpassing anything witnessed in the current market cycle.
The analyst predicted that investors who profited from Bitcoin and meme-inspired cryptocurrencies will likely reinvest their earnings, igniting another round of rallies within the altcoin market.
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