Altcoins Outperform Bitcoin Amid Price Surge and Regulatory Concerns
Altcoins are currently outperforming Bitcoin (BTC) amid a significant uptrend in crypto prices, marking a shift since the 2021 highs. This increase coincides with Bitcoin approaching an all-time high of $100,000, influenced by Donald Trump's presidential victory as a pro-crypto leader.
However, Bloomberg reports lingering uncertainty from the 2021 crypto collapse, with many altcoins experiencing volatility during previous market cycles.
Expert Voices Skepticism on Altcoin Rally
Altcoins have gained significantly, with tokens like Solana (SOL) reaching new highs and others doubling in price this year. Historically, altcoins tend to outperform Bitcoin during rallies but face sharper declines during downturns due to volatility and lower trading volumes.
The market remains cautious following the collapses of major players like FTX and Celsius, contributing to a bear market. Recent activity shows a resurgence, indicated by increased trading volumes and price rises among altcoins in November.
James Butterfill, head of research at CoinShares, expressed skepticism about a massive altcoin rally, noting potential regulatory changes and a proposed national Bitcoin reserve. Republican Senator Cynthia Lummis has introduced the Bitcoin Act, aiming to use Federal Reserve gold reserves to acquire 1 million Bitcoin.
Butterfill indicated that such legislation could impact market dynamics, potentially increasing Bitcoin's dominance over other cryptocurrencies.
ETF Approval Hopes Could Boost Crypto Interest Under Trump
While Solana is the only major altcoin surpassing its previous highs this year, experts like Nikolay Karpenko from B2C2 believe this rally could differ from 2021. The industry has matured, improving risk management and attracting more institutional investors.
Data shows that trading volume is increasingly concentrated among the top five altcoins, rising from under 50% earlier this year to over 60% this month. Factors influencing individual cryptocurrencies include Solana's rise linked to potential ETF approvals and Dogecoin’s gains from payment capabilities and support from figures like Elon Musk.
The prospect of more altcoins receiving ETF approvals under Trump's administration could enhance institutional interest. However, Butterfill cautioned that the market may start differentiating between assets based on fundamentals rather than speculation.
Despite positive sentiment toward altcoins, they trade significantly lower than Bitcoin, with Ethereum (ETH) valued at about 4% of Bitcoin's price.
After reaching a record high of $263, Solana has retreated to $240, reflecting Bitcoin's current correction after hitting its all-time high of $99,500. At the time of writing, SOL is up nearly 6% in the last 24 hours, while BTC has increased by 4% in the same timeframe.
Cover image from Dall-E, chart from Tradingview.