The fact that traders are choosing altcoins over bitcoin is proof of how they love the game of risk.
Altcoin refers to cryptocurrencies other than Bitcoin (BTC). The Namecoin is the 1st Altcoin for improving internet security and privacy. Altcoins are better versions of Bitcoin because they aim to plug the cryptocurrency’s shortcomings. Altcoins, like stablecoins, can potentially fulfill Bitcoin’s original promise of a medium for daily transactions. And can provide cheaper and faster transactions. Altcoins have a smaller investment market as compared to BTC.
Altcoins usually pull back during a BTC bull run. It is only after big brother BTC has stabilized and completed its rally that an altcoin uptrend kicks in. Some deductions have been made by market analysts over time. Investors can choose from a wide variety of altcoins that perform different functions in the crypto economy. According to CoinMarketCap, Bitcoin and Ethereum alone accounted for nearly 60% of the total cryptocurrency market. So, altcoins made up the rest. Altcoins have many of the same investment risks associated with Bitcoin.
Market wrap: what happens in the crypto market:
Bitcoin and other cryptos traded higher in the past 24hours. Altcoins outperformed BTC, suggesting a greater appetite for risk among traders. The largest cryptocurrency BTC has tumbled 10% in the last week to test the $40,000 mark on Monday. Ethereum has lost 20% in the same duration and was hovering around $3,000 levels.
The sentiment is also starting to improve among crypto traders, evidenced by a slight uptick in the BTC Fear & Greed Index on Tuesday. Still, some buyers remain on the sidelines as Bitcoin trades in a tight range between $32,000 and $46,000.
The inherent fear of a broad regulatory crackdown and lack of fundamental value has sent most altcoins plunging. Altcoins have more potential than most cryptocurrencies but they follow in the footsteps of Bitcoin. Given their high volatility, they are also more vulnerable to steep falls in a short time.
Stocks were also higher on Tuesday as the 10-year Treasury yield rose toward 2.9%, a level not seen since late 2018. Gold, a traditional safe-haven asset, traded lower over the past 24 hours, indicating a slight risk-on tone in global markets. Among other top plays from Metaverse and Defi space, Aave, Basic Attention Token, DeCred, SushiSwap, The Sandbox, Fantom, Helium, and Enjin Coin have lost at least 20% of their value in the last week.
A large amount of bitcoin supply has been accumulated between the $38,000 and $45,000 price range. The recent decline in buy volume relative to selling volume, however, could indicate a lack of conviction among bitcoin buyers. If a breakdown of the current range occurs, secondary support is seen at $27,000 and $23,500.
THORChain’s RUNE token rallied by 11% over the past 24 hours and Terra’s LUNA outperformed the wider crypto market, rising by as much as 11% over the past 24 hours, compared with a 2% rise in BTC over the same period. Meanwhile, DeFi tokens such as AAVE and EOS rose more than 7% on Tuesday.