- The recent rally in Bitcoin has caused the total crypto market cap to go from $800 billion to $1 trillion.
- Low market capitalization altcoins like Coti, Injective and Dusk Network have seen explosive rallies in the last 24 hours.
- While the top three coins, Bitcoin, Ethereum and Ripple have slowed down, other altcoins have no intention of stopping.
Cryptocurrencies have benefited from a new-found optimism amongst investors since the start of 2023. Bitcoin (BTC) and Ethereum (ETH) did their part in the initial run-up, but now the profits from these major coins seem to be moving to other coins, causing rallies in multiple altcoins that are easily doubling in value. While this period provides a great opportunity to grow portfolios, investors need to be cautious as markets could quickly turn bearish if BTC tumbles.
Also read: Three reasons why crypto market is primed for a selloff
Altcoins explode as greed takes over – COTI, INJ, DUSK
Coti (COTI), Injective Protocol (INJ), Dusk Network (DUSK) are three altcoins with market capitalizations of below $200 million that have taken the top three spots in the 24-hour price change. The returns for COTI, INJ and DUSK are 24%, 16% and 13%, respectively. Although these numbers are impressive, their seven-day performance is jaw-dropping.
COTI, INJ, DUSK 7-day returns
Despite the stellar performance, there is a possibility that this uptrend or bullish outlook will exhaust soon especially since Bitcoin price continues to consolidate around the $23,000 hurdle. Ethereum price has already seen a sudden sell-off in the last three days and altcoins are likely to follow soon if the big crypto gives in.
Until that happens, can altcoins rally? The answer to that is a resounding yes.
Is alt season upon us?
When Bitcoin rallies suddenly and settles around a certain level, it is usually followed by Ethereum, Ripple and Binance coin due to their high degree of correlation with the big crypto. Some times, Ethereum and other altcoins continue to rally while BTC rests and other times, ETH follows BTC closely, allowing low market capitalization altcoins to take center stage.
The second half of the phenomenon is known as “altcoin season” or colloquially known as “alt season.” The reason behind altcoins exploding in the second leg of a bull run is capital rotation, which is like a game of musical chairs. When the music stops aka Bitcoin price tanks or reverses, the altcoin rallies come undone quicker than retail can anticipate.
As a result, many FOMO-driven investors will be left holding the bag of altcoins or get liquidated on their futures trades.
In conclusion, yes, low market capitalization altcoins are likely to continue exploding as profits get redirected, causing them to move exponentially. However, this outlook is unsustainable if Bitcoin wakes up from its slumber and decides to favor the bears. Such a development would see altcoins crumble.
