- In the past several weeks, smaller market cap and lesser-known cryptocurrencies commonly referred to as “altcoins” have been outperforming Bitcoin, leading some observers to suggest that the cryptocurrency markets may be in “altcoin season” again as Bitcoin’s dominance wanes.
- Many rallies in altcoins have coincided with developments or major announcements peculiar to those specific cryptocurrencies only and had little to do with the broader market sentiment, providing a bit of a buffer for a basket of digital assets.
The reason why you’ll never see any aisle markings in a Costco is that part of its highly successful business model is to ensure that shoppers wander around the store and pick up stuff they wouldn’t otherwise have if they knew exactly where everything was.
That spirit of discovery in Costco is what keeps it so profitable and may be what’s contributing to a recent rise in so-called altcoins (anything but Bitcoin) as investors search for opportunities outside of the benchmark cryptocurrency.
In the past several weeks, smaller market cap and lesser-known cryptocurrencies commonly referred to as “altcoins” have been outperforming Bitcoin, leading some observers to suggest that the cryptocurrency markets may be in “altcoin season” again as Bitcoin’s dominance wanes.
Part of that interest in altcoins has of course been spurred by upcoming software upgrades in the Ethereum blockchain which has the potential to revolutionize the cryptocurrency industry, promising a shift to the far less energy-intensive proof-of-stake method to secure the blockchain as well as allowing more transactions at vastly increased speeds.
But it’s not just Ether which has been doing well relative to Bitcoin, other so-called “Ethereum killers” like Solana and Avalanche have also been outperforming the original cryptocurrency.
The cryptocurrency markets have surged in both interest and size since the start of the pandemic, with investors racing to find and place bets on the next Bitcoin and an entire industry fueled by serious venture capital money has been feeding growth.
Investors already participating in the cryptocurrency ecosystem through their stakes in both Bitcoin and Ether were looking to diversify away from just the largest cryptocurrencies, both as a portfolio hedge but also to take part in the more substantial upside potential.
According to data from CoinMarketCap, Bitcoin’s share of the total market cap of cryptocurrencies, also referred to as its “dominance” has declined from 65% before the pandemic, to around 40% today.
But with great viability also comes great volatility and altcoins tend to be far more volatile than Bitcoin or more “established” cryptocurrencies like Ether, although the potential for big payoffs could be far larger as well.
Many rallies in altcoins have coincided with developments or major announcements peculiar to those specific cryptocurrencies only and had little to do with the broader market sentiment, providing a bit of a buffer for a basket of digital assets.
