Week by numbers
The past week in the cryptocurrency market has been marked by strong upward trend. The price of the largest cryptocurrency, Bitcoin, rose by approximately eight percent, and the price of the second-largest cryptocurrency, Ether, increased by about nine percent. The total market cap of the rest of the crypto market (excluding major stablecoins) soared by an impressive twenty-five percent.
As Bitcoin and Ether prices moved in tandem, there were no significant changes in the ETH/BTC ratio. However, as altcoins outperformed Bitcoin significantly, Bitcoin dominance dropped by about three percent (approximately two percentage points).
Among the tokens traded on the Kvarn X platform, the highest weekly gains were made by CRV (+104%), HBAR (+84%), and ONDO (+53%). Few assets experienced declines during this bullish week, with BONK (-11%) and RAY (-10%) among the rare losers.
Bitcoin Surpasses $100,000
A week ago, in our Pulse newsletter, we hypothesized that the cryptocurrency market rally, sparked by the U.S. presidential election, might be reaching its peak. At the time, Bitcoin had just been rejected at the $100,000 level, and we predicted that breaching this barrier might first require a consolidation phase.
The consolidation phase for Bitcoin lasted only about a week, as on the night of Thursday, December 5, 2024, the cryptocurrency market witnessed a historic moment: the largest cryptocurrency, Bitcoin, surpassed the $100,000 milestone for the first time.
This milestone will go down in Bitcoin’s history as a significant achievement. Bitcoin first crossed the $1,000 threshold in 2013, the $10,000 level in 2017, and now the $100,000 mark.
Two weeks ago, when Bitcoin was first approaching the $100,000 threshold, we wrote:
"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."
Now that this milestone has been reached, the coming weeks will show whether our expectations hold true. At present, we consider this highly likely, supported by observations from the past week, especially in the altcoin market.
Alt-Season Has Begun
Two weeks ago, in our Pulse newsletter, we discussed the possible onset of an "alt-season." At the time, we wrote:
"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."
This sharp and sudden reversal is precisely what we have witnessed over the past week.
The OTHERS category, representing the total market capitalization of altcoins outside the top 10, has strengthened against Bitcoin by over 50 percent in two weeks.
What to Expect After Bitcoin Dominance Reverses?
In the past two bull markets, Bitcoin dominance dropped to around 40 percent. If this were to happen again, the journey (from 60% -> 40%) would be only a quarter complete (60% -> 55%).
Reaching the 2021 highs for the OTHERS/BTC ratio would mean a further strengthening of over 100 percent against Bitcoin.
The chart shows that once the OTHERS/BTC ratio started to rise, it accelerates rapidly.
Currently, it seems that the “alt-season” we have frequently mentioned in the Pulse newsletter over the past year has indeed begun. If this is the case, it would mean significant outperformance of smaller cryptocurrencies compared to Bitcoin.
We close with three on points on alt-season:
- All the above assumes that the current cryptocurrency bull market resembles previous ones. It’s always wise to consider the possibility that this time may be entirely different.
- Past alt-seasons were characterized by broad-based altcoin rallies. However, compared to 2021, the number of crypto tokens has exploded. As the number of tokens grows, there may come a point when the entire altcoin market doesn’t rise, but gains become increasingly concentrated in specific segments. Careful token-picking remains therefore essential, even during an alt-season.
- While the general trend for Bitcoin dominance appears to have turned downward, some short-term upward correction wouldn’t be surprising. If Bitcoin’s price surges strongly after breaking the $100,000 barrier, altcoins might initially "sit on the sidelines," resulting in a rise in Bitcoin dominance. Once Bitcoin consolidates, capital often flows into altcoins, causing Bitcoin dominance to decline again. This phenomenon has been evident over the past two weeks.
With these thoughts, we leave readers to follow the fascinating developments in the cryptocurrency market after Bitcoin’s historic milestone. We’ll return next week with another Pulse newsletter—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 get started in crypto investing, this section offers examples of themes around which you could begin building a portfolio. However, please note that nothing in this newsletter constitutes financial advice or should be interpreted as an encouragement to make investment decisions.
Theme Idea: Category Leaders
If an investor lacks the knowledge to assess which crypto sectors to prioritize, a relatively straightforward approach is to build a crypto portfolio from the largest tokens in each category. Correlations within categories are generally quite strong, so holding the largest token in a category provides good exposure to that category’s overall development. Since category leaders tend to have the largest market caps, they are also often less volatile, which may help with adjusting to the inherently high volatility of the crypto market. On the other hand, it need to be noted that the largest tokens by market cap may not necessarily offer the best returns within their category either.
An example of a portfolio based on category leaders could include:
- Bitcoin (BTC) (category leader in payment tokens)
- Ether (ETH) (category leader in modular smart contract protocols)
- Solana (SOL) (category leader in monolithic smart contract protocols)
- Uniswap (UNI) (category leader in decentralized finance (DeFi))
You’ll find more theme ideas for building a portfolio in future Pulse newsletters!
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.
