The majority of altcoins in the crypto space have been rallying independently of the largest cryptocurrencies in the space. However, while this has been good so far, it could also present a possible roadblock for the altcoin bull rally.
Bitcoin And Ethereum Could Cause A Problem
Over the last week, while multiple altcoins have been rallying and seeing double or triple-digit gains, the price of the two largest cryptocurrencies in the space, namely Bitcoin and Ethereum, have not seen much upside. They have continued to consolidate without affecting the market.
According to a report by on-chain data aggregator Santiment, this has seen the likes of HEX and GRT rally tremendously. Also, during this time, AI tokens such as FET and AGIX have done well, enjoying the continued attention being given to artificial intelligence by investors.
However, Santiment cautions investors who are putting money into small and mid cap altcoins at such a time. The problem here lies in the fact that these altcoins are seeing price increases without any positive movement from Bitcoin, which is an established market mover.
📊 February hasn't seen a repeat of excitement for #Bitcoin & #Ethereum like we saw in January. But #altcoins like $HEX (+64%), $TMG (+70%), and $GRT (+66%) have had other plans this past week. Be cautious, though, when money is cycling into mid/small caps without top cap rising. pic.twitter.com/TYO8pNh5yF
— Santiment (@santimentfeed) February 7, 2023
Thus, if the prices of Bitcoin and Ethereum begin to move once more, it could drain liquidity from these small and mid caps as investors rush back into established coins. The result of this would be a massive decline in price that could very well wipe out all of the gains established over the last week.
Altcoin Bull Rally May Continue
Now, while there is certainly some threat from Bitcoin and Ethereum suddenly moving, the altcoins have shown strength. For example, the market dominance of bitcoin has dropped 1% in the last week, falling from 44.21% last Friday to its current dominance of 43.40%. Likewise, Ethereum’s market dominance fell from 19.84% on Friday to 19.69% today.
BTC dominance drops in the last week | Source: Market Cap BTC Dominance on TradingView.com
Given this increase in altcoin dominance, it proposes that the rally may not be as significantly affected when Bitcoin and Ethereum begin moving. Also, altcoins could also enjoy some upside if these large cap assets begin rallying once more. But for now, the price performance of BTC and ETH remains muted.
According to data from Coinmarketcap, the most profitable altcoins over the past week have been the AI tokens. AGIX is up 224% in the seven-day period while FET is seeing 109% gains in the same time period. Others include GRT with 95% gains and OCEAN with 55% gains.