In this third and final post in our series of articles to help you comprehend the money flow through crypto investments, we look at historical trends that appear to cause a known sequence of investor actions following a Bitcoin price increase.
In part one of this series, we examined why Bitcoin is typically the first currency to alter and how it has been shown to lead to money movement (which we’re talking about in this series). In part two, we focused on why Ethereum is so frequently the next currency after Bitcoin.
We explained that because it is so huge (Ethereum is the second-largest crypto asset by market capitalization), it is frequently the following currency after Bitcoin (also known as ETH or ETC).
This week, we look at the next stage, which is playing out a little differently than it has in the past.
This time, rather than money flowing from Ethereum to large-cap altcoins, they seem to be moving all at once. But first, let’s understand what constitutes a big-cap altcoin.
“…large-cap altcoins…” What the heck are you talking about?
Let’s take a closer look at it. A cryptoasset with a large market capitalisation, such as “large-cap,” is referred to as a “large-cap.”
The term “market capitalization” refers to the value of a cryptocurrency. For example, Bitcoin’s current market cap is $1.1 trillion. In other words, the total value of all bitcoin in circulation is $1.1 trillion.
What exactly is a “altcoin”?
Large-cap altcoins, in essence, are any crypto asset with a substantial market value that isn’t Bitcoin. There’s also the term “altcoin,” which refers to any cryptocurrency other than Bitcoin.
Let’s look at how the standard money flow began and why this time could be different, now that we’ve learned what big-cap altcoins are.
It all started with the regular cash flow.
We observed Bitcoin’s price easily outperforming alternative cryptocurrencies in late September, when the market turned around. Meanwhile, Ethereum (+29%), Solana (+16%), Cardano (-6%) and a slew of other coins were having difficulties keeping up with the old guard.
As we saw in the preceding parts of this series, the “normal money flow” suggests that Bitcoin cash will flow from Ethereum to large-cap altcoins and then back into bitcoin.
The conventional money flow cycle is no longer so typical.
The fact that money is not only flowing into Ethereum, according to past price data, suggests that it’s not just flowing into Ethereum. This time around, large-cap altcoins are migrating in tandem with Ethereum.
This is a fundamental shift in the historical flow of money that many investors have followed for years, and the answer to why it’s changing is straightforward.
The battle for the cryptocurrency crown is on.
The flow of Bitcoin to Ethereum used to be a sure thing, like receiving headphones with your new Apple iPhone. And much like you, Ethereum is discovering that its box is getting smaller and smaller.
Many reasons are at work here, but the most important is that the large-cap altcoin sector now offers investors a far wider range of ambitious and potentially disruptive technologies to pick from.
In the past, Ethereum may have been thought to be the only viable option for a smart contract-based decentralized future, but that is no longer the case. For example, Solana, Cardano, and Polkadot are among the many new smart contract players.
We’re now seeing many investors diversify their investments across numerous Ethereum rivals rather than focusing solely on one big name cryptocurrency.
The chart above compares the returns of these large-cap altcoins to Bitcoin since Bitcoin reached its all-time high, when money started flowing out of it.
It’s clear from the graph that several major cryptocurrencies are keeping pace with Ethereum rather than following it in the next phase (grey line). Furthermore, all of the aforementioned big-cap altcoins outperform Bitcoin (orange line) in terms of return.
Investors who are solely interested in decentralized finance (DeFi) applications like lending and yield-farming are also flocking to large-cap altcoins.
Large-cap altcoins operate as the technological layer beneath the world’s major technological changes, which have received significant media attention and developed entirely internet communities. NFTs, for example, have given artists new ways to generate income from their work.
According to a recent study by the Crypto Gaming Alliance, half of all crypto wallets in existence are linked to blockchain-based gaming. The most popular technologies for both NFTs and blockchain-based gaming are found in the large-cap altcoin space.
What should you do?
It’s clear that deciding where to invest in this stage of the cryptocurrency market cycle is more difficult than it was a year ago.
We’re going through a race to see who can first really challenge Ethereum’s second-largest market capitalization, and there are no shortage of viewpoints on the subject.
Revix is making it simple to get into the altcoin market.
We’ll start with a one-time-only party from the 29th of October through the 1st of November when you’ll pay no fees on Bitcoin purchases made in ZAR or GBP in celebration of Satoshi Nakamoto’s 13th anniversary and the publication of his Bitcoin whitepapers.
Between the 5th and 11th of November, you won’t have to pay any fees if you buy Cardano, Uniswap, Polkadot, Solana, or Binance Coin using ZAR or GBP.
Back the altcoin you believe will transform the world or add exposure to all of your holdings. In either case, there are no purchase costs.
Revix is a London-based company that is backed by Sabvest, which is a JSE listed firm. Revix gives you access to all of the individual cryptocurrencies we’ve discussed in this post, such as Bitcoin, Cardano, Ethereum, Polkadot, Solana and many more.
When investing in cryptocurrencies, Revix offers simplicity, trust, and outstanding customer service. Its simple online platform allows anybody to conveniently own the world’s top cryptos in just a few clicks.
Revix helps new customers through the sign-up procedure to their first deposit and first investment after they’ve been set up. Most clients are in charge of their own portfolio but may contact the Revix team at any time for assistance.
Remember, cryptocurrencies are high-risk investments. You should only invest what you can afford to lose and should seek independent financial advice if necessary.
This post is for educational purposes only. The ideas presented are opinions, not facts, and should not be interpreted as investment advice or recommendations. This article is not a solicitation of an offer to buy or sell any cryptocurrency.
Subtly charming pop culture geek. Amateur analyst. Freelance tv buff. Coffee lover