Why Are Small Cap Altcoins Outperforming Bitcoin And Other Major Crypto Assets?

Tony "The Bull" Severino

1 year ago

3 mins read

small cap altcoins bitcoin ethereum xrp crypto

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Bitcoin broke above $10,000 and is trading well above the key level. Ethereum is up over 200% year to date, and the rest of the crypto market is right behind it. However, small-cap altcoins have been beating out all major crypto assets three-to-one over the last month. But what is causing the significant outperformance?

Total Crypto Market Rallies 100% In 2020, Small-Cap Altcoins Benefit The Most

Before the recent pullback across crypto, the total market cap rose a full 100% in 2020. During the greater crypto market rally, Bitcoin dominance has dropped considerably, allowing altcoins to shine.

Ethereum, for example, has beaten Bitcoin by a large percentage, with nearly three times the ROI in the same timeframe. Other altcoins, such as Chainlink have fared even better, as has the entire DeFi space.

It’s led the total altcoin market cap to also edge out Bitcoin in terms of overall year to date gains. Crypto analysts refer to this change in trend as an altcoin season, and it is not uncommon to see more than 100% performance against BTC ratios on altcoin trading pairs.

But as well as Ethereum and other major cryptos have performed, it is small-cap altcoins that have done the best this August.

Why Are Small-Cap Cryptocurrency Assets Beating Out Majors Like Bitcoin, Ethereum, and XRP?

All of crypto is still net positive for August, despite a rejection over the last two weeks. Bitcoin’s monthly candle has since turned red, but bullish altcoins have helped keep the total crypto market cap monthly green.

As well as Bitcoin has performed, its altcoins that have added the most percentage gain to the total market cap. But there is one particular subset of alts that have done even better than the likes of Ethereum, XRP, Chainlink, and others.

According to data from the latest Weekly Report from Arcane Research, the Bletchley 40 Index comprised of 40 total small-cap altcoins has shown more than three times the performance as mid-caps, five times the performance of majors like Ethereum and XRP, and a whopping ten times the performance of Bitcoin.

But why? Why are small-cap altcoins soaring while safer, trusted crypto assets aren’t doing anywhere near as well?

Bletchley Indexes claims that the Bletchley 40 Index consists of assets with a market capitalization that span “from $30 million to $500 million USD.”

By comparison, Bitcoin has a $200 billion market cap. Gold’s is $11 trillion. When market caps are larger, it takes far more capital to move the needle compared to illiquid, low cap altcoins.

With a massive capital rotation going on due to so many crypto investors in profit, what little money does trickle down into small-caps, ends up resulting in a lot more ROI due to market cap alone.

That’s not to say that small-cap altcoins are a better investment. These same assets crashed the hardest after the crypto bubble. For now, however, putting money in small-caps has been far more rewarding than Bitcoin or other majors coins have.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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