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Amid a significant uptrend in cryptocurrency prices, altcoins have begun to outperform Bitcoin (BTC), marking a notable turnaround since the historic highs of 2021. This rally coincides with Bitcoin approaching a record high. All-time high of $100,000driven by the presidential election victory of Donald Trump, who positioned himself as a pro-crypto leader.
However, Bloomberg Reports The uncertainty caused by the collapse of cryptocurrencies in 2021 is still evident among investors, as many altcoins have witnessed significant price fluctuations during past market cycles.
Expert voices cast doubt on the rise of altcoins
Altcoins have shown impressive gains, with coins like Solana (SOL) hitting all-time highs, while many others have doubled in price since the beginning of the year.
Historically, altcoins tend to outperform Bitcoin During periods of market upswing, but it can also experience steeper declines during downturns due to its higher volatility and lower trading volumes.
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The cryptocurrency market has been cautious since the collapse of major players such as FTX and cryptocurrency lender Celsius, which contributed to a major bear market. Despite this, recent activity points to a resurgence, with trading volumes increasing and prices rising among altcoins throughout November.
Interestingly, James Butterville, head of research at CoinShares, expressed skepticism about the massive rise of altcoins, especially in light of potential regulatory changes, including a proposed national Bitcoin reserve.
Republican Senator Cynthia Lummis introduced Bitcoin lawwhich seeks to allocate funds from the Federal Reserve’s gold reserves for a strategic stockpile of 1 million bitcoins.
Butterville told Bloomberg that the political implications of such legislation could significantly impact market dynamics, which could increase Bitcoin’s dominance over its peers.
Hopes for ETF approval could boost interest in cryptocurrencies in the Trump era
While Solana stands out as the only major altcoin to surpass previous highs this year, experts like Nikolay Karpenko of cryptocurrency trading firm B2C2 believe this rally may differ from the 2021 experience.
The expert highlighted the industry’s maturity over the past few years, which has seen improvements in risk management and the entry of “more strategic” and institutional investors into the cryptocurrency space.
As altcoins continue to gain traction, the data shows Trading volume It has become increasingly concentrated among the five most traded altcoins, rising from less than 50% earlier this year to more than 60% this month.
This shift can be attributed to unique factors influencing individual cryptocurrencies, such as Solana’s rise fueled by excitement about the potential. Exchange Trade Fund ETF approvals and Dogecoin’s gains related to its payment capabilities and support from figures like Elon Musk and his new position at the Department of Government Efficiency (DOGE).
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The possibility of more altcoins gaining approval for ETFs under the Trump administration could further boost institutional interest, the expert noted. However, Butterville warned that the market may start to differentiate between assets, focusing more on fundamentals rather than riding the wave of speculative trading.
Despite the bullish sentiment surrounding altcoins, they are still trading at prices significantly lower than Bitcoin, with the price of Ethereum (ETH), the second-largest cryptocurrency, being only about 4% of Bitcoin’s value.
After hitting a new record high of $263 during last week’s rally, Solana has since fallen to the $240 level, echoing the current correction Bitcoin is seeing after hitting a new all-time high of $99,500. At the time of writing, SOL is up approximately 6% on the 24-hour time frame, while BTC is up 4% in the same period.
Cover image by Dall-E, chart by Tradingview