The rise in the Bitcoin rate to $35 thousand, which occurred on October 24, contributed to the rise in price of a number of altcoins, some of which over the past week have outpaced the market leader in terms of growth dynamics. As a rule, after a Bitcoin rally, jumps in less capitalized coins are often observed, but this time they were joined by more established crypto assets.
Solana (SOL) has recovered from its early October decline, which was caused by frequent mentions of the token in the first weeks of the trial of the former head of the FTX crypto exchange, Sam Bankman-Fried. Over the past week, the token has grown by 40%; on October 27, the price of SOL is at $32.5. According to a report from CoinShares, this token has become the most popular altcoin among investors in the largest US crypto funds this year. Last week alone, investors invested $15.5 million in the token, which is second only to Bitcoin in terms of capital inflow.
Judging by what is happening in the market, one might think that the “altcoin season” may have returned, says Nikita Vassev, co-founder of 0xprocessing. The markets have recently experienced a significant spike in FOMO, which has indeed triggered a large volume of buying. As a result, Bitcoin's share exceeded 52%, and its price went above $35 thousand. However, traders who made purchases based on emotions already seem to be conducting a “panic sale.” At the same time, the altcoin season index remained at the same level as in 2019-2020, when the foundation for further hundredfold growth was just being laid, the expert adds.
At the moment, it is too early to talk about a full-fledged “alt-season,” says Vladimir Chirpicinikov, CEO of the Exmo.me exchange. Leading altcoins, according to his estimates, should grow by at least another 20%. Now what is happening in the market is “just a rebound”, since most coins are oversold. The growth of altcoins occurs due to correlation with Bitcoin, and is also due to the fixation of short positions and local short squeezes.
“Other assets are still much weaker than Bitcoin. If the first cryptocurrency enters into consolidation, and the leading altcoins show significant growth, then we can already assume that the altseason has started, explains Chirpicinikov.
Bitcoin share growth
“I would not talk about the altcoin season, but about the growth of the entire cryptocurrency market, provoked by persistent inflation risks in the global and American economies, expectations of an increase in the key rate by the US Federal Reserve and geopolitical tensions that have intensified against the backdrop of the Middle East conflict,” comments the co-founder of the ENCRY Foundation Roman Nekrasov.
The altcoin season is more characterized by another movement: the growth of altcoins against the backdrop of Bitcoin stagnation with a sharp decline in the share of Bitcoin in the total capitalization of the cryptocurrency market. Now we are seeing the growth of Bitcoin and the growth of its capitalization, which indicates that investors are transferring part of their capital into Bitcoin as the most reliable asset on the crypto market, explains Nekrasov.
How to act in the market
The growth of Bitcoin, of course, pulls other participants in the crypto market with it, so to diversify investments, you can consider investing in other projects, says Roman Nekrasov. If we talk about short-term investments, you can look towards cryptocurrency projects related to artificial intelligence or Web3. Both still remain a “hot topic” for the entire high-tech market.
“For long-term investments, Ethereum (ETH) is suitable, which remains the leader in the niche of blockchain platforms for launching decentralized applications, and this area, too, according to investors’ expectations, will continue to grow,” Nekrasov predicts. “But I would still recommend sticking to moderate risk, and devoting the bulk of your investment portfolio to Bitcoin.”
According to Vladimir Chirpicinikov, for short-term trading you need to wait a couple of days and, after a slight rollback to the nearest support levels, try to open long positions. For long-term investments, it is worth gaining positions now - there is still at least one quarter to form a portfolio with an excellent average price, the expert is sure.
“You need to choose fundamental and oversold coins. These include, for example, APT, AVAX, AGIX, ADA, DOT, ALGO or LINK. It should be recalled which altcoins to choose and how much capital to allocate is a personal matter for each investor. You should not blindly believe recommendations; it is also important to always conduct your own assessment of assets,” warns Chirpichinikov.
According to Vassev, Dogecoin (DOGE) and Shiba Inu (SHIB) can be looked at in the short term. The rise in major memecoins indicates that traders are taking more risky moves based on Bitcoin price movements. But it is worth noting that these coins often stand out from the general market trend, and their growth may be associated with their high volatility, the expert warns.
Cryptocurrency Polymesh (POLYX), according to Vassev, can be considered for a long-term investment with a possible entry at a price of $0.205 - $0.215 and a potential profit of 10% to 20%. POLYX is a new coin on the Binance futures exchange and has a relatively small capitalization. In the first days after listing, such coins often experience high volatility, which opens up opportunities for profit if due caution in decisions.
“In general, I recommend considering investments in the USDT stablecoin and liquid altcoins, which are currently experiencing a decline in relation to Bitcoin,” Vassev clarifies. “In general, the scenario assumes further market growth.”
