Week by numbers
The past week in the cryptocurrency market has mirrored the previous one with strong upward momentum. The price of Bitcoin, the largest cryptocurrency, rose by approximately 8%, and the price second-largest cryptocurrency, Ether, increased by about 2%. The total market cap of the rest of the cryptocurrency market (excluding major stablecoins) increased by roughly 10%.
During the week, Bitcoin dominance rose again by about 0.6%. This was primarily due to its continued strengthening against Ether, reflected in a roughly 5% drop in the ETH/BTC ratio.
This drop resulted in the ETH/BTC ratio hitting new lows, briefly dipping below 0.32.
Within the cryptocurrency market, there was some interesting capital rotation between sectors. Consequently, the top performers of the week included HBAR (+99%), XLM (+90%), and XRP (+58%), all representing slightly older cryptocurrency projects.
On the other hand, some of the biggest losers of the week came from meme coins that had shown strong price increases in previous weeks. Double-digit losses were recorded by WIF (-24%), POPCAT (-17%), and PEPE (-11%).
Bitcoin Nearing $100,000
Bitcoin's recent price surge has taken it to a peak of over $98,000. It is now only about 2% away from the symbolic $100,000 mark.
Surpassing this milestone would be a truly historic achievement for Bitcoin. If this threshold is crossed, it will likely heighten expectations of a bull run similar to 2021, potentially sparking outright market hysteria. A move past $100,000 would likely bring significant media attention to the cryptocurrency market, attracting new investors.
The $100,000 milestone also increases the likelihood of the long-awaited "alt-season" among crypto investors. Next, we provide some thoughts on this topic.
When Alt-Season?
The cryptocurrency market has been heavily Bitcoin-driven since year 2022. This is evident in Bitcoin dominance, which measures Bitcoin’s share of the total cryptocurrency market.
In previous Pulse newsletters, we have suggested that this trend could be nearing its end. If the current bull market were to follow the patterns of 2017 and 2021, we would see Bitcoin dominance start to decline in the coming months. In other words, altcoins as a collective could begin to outperform Bitcoin.
Why bring this up now, when there is yet no concrete evidence of a reversal in Bitcoin dominance? The reason is that if it were to happen in a manner similar to 2021, the reversal could be very sudden and sharp.
In the graph below, the top panel shows Bitcoin dominance, and the bottom panel displays Bitcoin’s dollar price. The black vertical lines mark the timing of Bitcoin's new all-time highs (ATH).
The graph shows that at the end of 2020, after Bitcoin hit a new ATH, Bitcoin dominance continued to rise for a while before abruptly declining.
Since it may be difficult to intuitively grasp what a drop in Bitcoin dominance from 70% to 40% means in practice, we examine the same phenomenon using the OTHERS category (smaller altcoins) in relation to Bitcoin.
From the graph, it can be observed that after Bitcoin reached a new ATH in 2020, the combined market value of the OTHERS category relative to Bitcoin increased by approximately 250% over the next six months. When this relative growth is combined with Bitcoin’s dollar price tripling over the same period, the total dollar value of the OTHERS category nearly tenfolded.
There are, of course, no guarantees that a 2021-style “alt-season” will repeat itself, or indeed occur at all. However, its recurrence is a plausible scenario for which crypto investors should prepare in advance. As part of this preparation, one could determine under what circumstances to increase altcoin allocation, how much to allocate, and which altcoins to focus on.
From experience, we can state that decision-making on these topics is probably much easier now, while the altcoin market still remains relatively quiet. During the spring of 2021, when altcoins were rising by tens of percent daily, new price records were being set every day, and new skyrocketing coins were constantly appearing in headlines, making thoughtful investment decisions without panic or FOMO (Fear of Missing Out) was significantly harder, if one hadn’t already devised an altcoin strategy before.
Signs of a possibly impending alt-season are still not yet clear, and Bitcoin dominance remains clearly on the rise. However, one notable observation is that despite its upward trend, Bitcoin dominance has begun oscillating, occasionally dropping to the 50-day moving average.
Similar sharp oscillations were observed in late 2023, preceding strong price increases in the spring. These downward swings in Bitcoin dominance may indicate a growing appetite for risk within the cryptocurrency market, potentially foreshadowing the onset of an alt-season.
Finally, we want to illustrate the significant growth potential we see in the altcoin market. While Bitcoin is approximately 30% above its March price peak, the overall value of the altcoin market (TOTAL2-USDT-USDC) is still about 10% below the March peak and nearly one-third below its 2021 peak.
In a situation where Bitcoin is nearly 50% above its 2021 peak, the 2021 top for the altcoin market seems a rather conservative benchmark. We wouldn’t be surprised if it were significantly surpassed during a strong alt-season.
Still, we would like to end with some words of caution.
There are no guarantees of an alt-season happening. The fact that we saw one in 2021 does not mean we will see one in 2025.
There are no clear signs of alt-season yet. As long as Bitcoin dominance remains above its 50-day moving average, there’s no need for crypto investors to act hastily.
Finally, we note that after the recent strong upward movement, Bitcoin’s dollar price seems quite overextended by many indicators.
If the cryptocurrency market were to experience a downward correction next, we consider it almost certain that Bitcoin's price would decline less than that of altcoins. A cautious crypto investor may still be satisfied with Bitcoin constituting a large portion of their portfolio.
With these thoughts, we leave reader to monitor the extremely interesting situation in the cryptocurrency market and Bitcoin’s potential crossing of the $100,000 mark. We will return next week with another edition of the Kvarn Pulse newsletter, so stay tuned!
New Tokens on Kvarn X
Kvarn X offers one of the most extensive selections in Europe, continuously expanding its list of interesting cryptocurrencies and tokens. With over 160 different cryptocurrencies already available, our platform uses industry-leading trading technology to provide access to over 40 marketplaces and exchanges globally, selecting the best liquidity providers for our customers, from individual investors to institutions.
At the end of October, we expanded our selection by over 30 new tokens. Explore the latest additions on our website:
https://www.kvarnx.com/en/content/new-tokens-and-cryptocurrencies-for-october
Ideas for Building a Crypto Portfolio?
If you're wondering how to build a crypto portfolio or how to get started with crypto investing, we offer various theme-based examples in this section as ideas for constructing your portfolio. Please note that nothing in this newsletter constitutes investment advice or should be interpreted as an encouragement to make investment decisions.
Theme Idea: Memes
Meme coins are one of the unique sectors of the cryptocurrency market. What defines meme coins is that they are not backed by any real project; their value is purely based on attention and speculation.
The price development of meme coins often reflects the sentiment of the cryptocurrency market most clearly. In a bull market, they tend to rise the strongest, and in a bear market, they ofen fall the hardest. They can thus be considered an especially high-risk segment of an already inherently high-risk crypto market.
An example of a meme-themed cryptocurrency portfolio from the Kvarn X service selection could include:
- Dogecoin (DOGE)
- dogwifhat (WIF)
- Pepe (PEPE)
- Bonk (BONK)
More theme ideas for building your portfolio can be found in future editions of the Pulse newsletter!
The material contained in the Kvarn Pulse is produced solely for the purpose of marketing communication. Any information conveyed through Kvarn Pulse should not be construed as an offer or an invitation to make any purchase or sale decisions, or as an encouragement to make investment decisions about any investment object. Copying or borrowing the content of the newsletter without Kvarn's express permission is prohibited. The information presented in the newsletter pertains to the situation prevailing at the time of writing, and the information may or may not have changed. Kvarn Capital Oy does not guarantee the accuracy or completeness of the information contained in the newsletter or referred to in the newsletter.
