Written by: Alvis, Mars Finance
Introduction: Between the bull market of Bitcoin and the downturn of altcoins, how do investors choose?
Bitcoin has set new historical highs one after another. As of press time, Bitcoin is quoted at about US$99,000, approaching the US$100,000 mark, and market sentiment has heated up. More and more investors predict that Bitcoin will continue to rise in the coming period, pointing to higher targets, and some even believe that its long-term value will far exceed this price. However, while the price of Bitcoin hit a new high, the altcoin market fell into a downturn. The prices of many small currencies shrank significantly in the short term, and market capital flows were clearly tilted towards Bitcoin.
According to Binance data, among all the coins currently listed on Binance, the number of rising coins is 285, while the number of falling coins is as many as 976. Many investors complain that when Bitcoin rises, altcoins fail to keep up, and when Bitcoin retreats, altcoins fall even more sharply. This has led to many retail accounts suffering greater losses due to heavy positions in alternative currencies. Even in this round of Bitcoin bull market, instead of making profits, they have experienced asset shrinkage.
What is even more noteworthy is that many investors even choose to sell altcoins in exchange for Bitcoin at the current stage. They believe that Bitcoin has the potential to rise by another 30% in the short term, and that it will be difficult for altcoins to achieve such gains. Under this expectation, many people have increased their positions in Bitcoin. Even when it is close to the high of $97,000, they still have high expectations for its subsequent trend.
This phenomenon has triggered a series of questions among investors: With Bitcoin rising all the way, should we continue to chase Bitcoin? Or should we take advantage of the sluggish price of alternative coins to cover our positions in some projects with potential?
This article will conduct an in-depth analysis from the perspectives of market sentiment, capital flows, historical trends, and investor holding strategies, and discuss the pros and cons of chasing Bitcoin and covering up positions in competing coins in the current market environment, helping investors explore potential investment opportunities, and Make more rational decisions.
Institutions continue to add positions, buy, buy, buy Bitcoin
The overall transaction volume of the Bitcoin industry has exceeded 50 billion US dollars
As Bitcoin prices soar, the total value of assets directly invested in Bitcoin in U.S. exchange-traded funds (ETFs) has exceeded the $100 billion mark.
Eric Balchunas, senior ETF analyst at Bloomberg, pointed out that the overall trading volume of the Bitcoin industry has exceeded $50 billion, which is equivalent to the average daily trading volume of the entire British stock market. It is particularly worth noting that the trading volume of MicroStrategy (MSTR) has reached 32 billion U.S. dollars, and the combined trading volume of MSTU and MSTX is also 6 billion U.S. dollars. This data not only exceeds the trading volume of spot Bitcoin ETF, but also Continuous growth can be called a market miracle.
MicroStrategy: The engine behind Bitcoin’s bull run
Bitcoin’s rise is inseparable from MicroStrategy’s strong support. The company used debt issuance to raise funds to purchase Bitcoin in the early days. The value of each MSTR share actually represents the number of Bitcoins held by the company, which also makes it a "Bitcoin indicator" in the US stock market. But in recent years, MicroStrategy has adopted a direct and more expansionary approach - "additional issuance at a premium."
Simply put, when the price of Bitcoin increases, the company's market capitalization increases, and MSTR's Bitcoin "exchange rate" will also generate a premium. At this point, MicroStrategy raises funds by issuing additional shares to buy more Bitcoin at a premium. In this way, the number of Bitcoins corresponding to each share of MSTR will further increase, thereby driving the company's market value and stock price to continue to rise. This process is like a self-circulating growth engine.
Marsbit has previously analyzed MicroStrategy. At that time, the stock price of MSTR was US$250. Our strategy was to increase our holdings. The current stock price of MSTR is US$473.
Recommended reading > "No production, just hoarding coins": MSTR's latest financial report reveals MicroStrategy's capital thickening and high premium valuation model
"Infinite Fund Crack": The Binding of U.S. Stocks and Bitcoin
This approach not only makes MicroStrategy become more and more powerful, but also promotes the US stock market to enter a new paradigm shift (Paradigm Shift). MicroStrategy CEO Michael Saylor has stated many times that his model is the so-called "Infinite Money Glitch."
At first, many people were not optimistic about this, but as U.S. stock giants such as Microsoft began to discuss incorporating Bitcoin into their financial strategies, the concept was gradually accepted by more market participants.
If Saylor's prediction comes true, more U.S. stock companies will follow MicroStrategy's model in the future and choose to use Bitcoin as part of the company's assets through "additional issuance at a premium." The price of Bitcoin will become more closely tied to the U.S. stock market, resulting in a large flow of funds, which will almost entirely flow into Bitcoin rather than other cryptocurrencies.
Institutional inflows have gradually become concentrated in Bitcoin, while other cryptocurrencies have failed to benefit. For example, the Bitcoin ETF continues to see record inflows, while the Ethereum ETF’s performance has been lackluster. This phenomenon clearly shows that Bitcoin has become the preferred target of institutional funds, and other crypto assets on the market are far less attractive than Bitcoin.
Market Fund Flow: Is Meme Coin also sucking up altcoin funds?
In this bull market, if there is any track that can rival the growth of Bitcoin, it is meme coins. From NEIRO to MOONDENG to PNUT, there are some "magic disks" that break through the market value of US$50 million from 0 every day, attracting a large number of funds to pursue. On-chain data shows that there are few signs of large investors and whales increasing their holdings of alternative coins, while support for meme coins is common. Especially within the Solana ecosystem, a large amount of funds flowed into meme coins, further squeezing the overall market value and price of altcoins.
This can be seen from the position data of mainstream crypto market makers.
According to data from Arkham, the majority of holdings among the top ten cryptocurrency market makers are concentrated in Bitcoin and meme coins. For example, more than 70% of the positions of QCP Capital, Flow Traders, and Cumberland are in Bitcoin. And large market makers like Wintermute and GSR Markets hold more than half of their shares in the Solana ecosystem and meme coins.
It is understandable that Bitcoin attracts institutional investment, but why do meme coins also attract a large amount of blood-sucking altcoin funds? Here are a few key reasons why:
1. Industrial polarization
As traditional finance (TradFi) aggressively enters the crypto market through compliance channels such as Bitcoin ETFs, more and more funds are being absorbed by Bitcoin. At the same time, meme coins, as a unique "speculative tool" in the crypto market, attract a large number of funds with high risk appetite due to their high volatility and extremely short capital return cycle. In contrast, many traditional altcoins have difficulty gaining market attention due to a lack of innovation and practical application scenarios. In contrast, Bitcoin and meme coins are "safe haven assets" on one side and "speculative darlings" on the other. They firmly occupy both ends of the market funds.
2. Trends in capital flows
The current situation of altcoins is ultimately closely related to capital flows. Many VC Tokens have inherent problems with high valuations. In addition, many projects lack support for actual product implementation after opening, resulting in a lack of market confidence in them. Meme coins take advantage of this and gain a lot of attention through low-threshold issuance, high speculativeness and community-driven sentiment. Investors can earn huge returns through meme coins in the short term. This high volatility makes meme coins particularly dazzling in the current market of shrinking funds.
3. Catalysis of culture and emotions
What’s truly unique about meme coins is that they’re not just an “investment tool,” they’re a cultural phenomenon. It carries the emotions and identity of the community and is an expression of collective consciousness. Meme coins do not rely on technology or functionality in the traditional sense, but form value driven by narrative and emotion. Investors join the meme currency community not just to make money, but also to participate in an emotion-fueled carnival. This is an attraction that many traditional altcoins don’t have.
At present, the superposition of the gold-absorbing effects of meme coins and Bitcoin has caused the performance of the altcoin market to be weak, and both funds and confidence have been squeezed. In the short term, this trend is difficult to reverse. Most of the liquidity in the market is firmly absorbed in these two areas, and the space left for altcoins becomes narrower. For altcoin investors, this is undoubtedly a serious challenge, but it may also be an opportunity to plan for a future rebound.
Looking back at history, what are the likely future trends for altcoins?
The wheel of history always repeats itself, but always creates something new. The current market capital is obviously tilted towards Bitcoin, but this does not mean that the “blood-sucking effect” will continue indefinitely. In fact, whenever Bitcoin continues to rise and breaks through important highs, market funds tend to flow back into the field of altcoins, looking for value depressions that have not yet been revalued. This rhythm of "Bitcoin first, altcoins later" has been repeated repeatedly in the past few rounds of bull markets, and has become a major rule of market capital flow.
Using data as a mirror, review the capital reflux phenomenon of altcoins
As crypto researcher @Pompeii2077 pointed out, if we use Total3 (excluding the total market capitalization of BTC, ETH and mainstream stablecoins) to observe the market, we will find that this pattern is particularly obvious in the last bull market.
On December 16, 2020, Bitcoin started a strong rally after successfully breaking through the previous high, doubling in just three weeks to January 8, 2021. However, during this period, the overall market value of altcoins has barely improved. What's more, within a few days of Bitcoin's brief retracement of 10%, the market value of altcoins plummeted by 36%. For small-market currencies, this retracement was even close to being cut in half.
However, a turnaround always sprouts out of despair. On January 8, 2021, after Bitcoin experienced a sharp retracement of 27%, altcoins finally started rebound mode. As Bitcoin recovered from the retracement and advanced further to a new high of $57,000 on February 21, 2021, the overall market cap of altcoins surged 197%, making the period a wild ride for altcoin investors.
However, the good times did not last long. After hitting a new high on February 21, Bitcoin ushered in a wave of rapid adjustments, falling 27% in seven days. Naturally, altcoins were not immune, falling 39% from their high point, and market confidence was severely hit. From the end of February to March 26, the overall market value of altcoins entered a volatile range, and investor sentiment was in a wait-and-see state.
The real outbreak began on March 26, 2021. On this day, Bitcoin pulled out a strong daily rebound, driving market sentiment to pick up, and the market value of alternative coins started a month-and-a-half-long charge. By May 12, overall altcoin market capitalization had risen a further 119% from its late-February highs, hitting new highs.
Why did May 12 become the peak of altcoin market capitalization? Two major macro events are worth noting:
The listing of Shiba token on Binance marks the peak of Meme culture;
The U.S. CPI data for April exploded, hitting a new post-epidemic high, triggering short-term surges in U.S. bond yields and the U.S. dollar index.
These factors combined to stimulate market sentiment, but subsequent adjustments are inevitable.
Bull Market Law: The Rhythm Resonance of Altcoins and Bitcoin
It can be seen from the review that whenever Bitcoin reaches a periodic top, the altcoin market is inevitably "blood-sucked", and even falls even more when it retracement. However, Bitcoin’s correction is often the starting point for altcoin rallies. This rhythm was repeated repeatedly in the last bull market, providing important reference significance for the current market.
The potential of altcoins: Opportunities in the downturn, which tracks and mainstream currencies are worthy of deployment?
Prices for many altcoins are currently at low levels, and history shows that this is often a golden window for potential projects. In particular, projects with technological innovation, ecological support and long-term growth logic are more likely to stand out in the future return of funds. On the basis of classic tracks such as DeFi, emerging fields such as RWA, Bitcoin ecology, DePin and AI are becoming the focus of investors, bringing new possibilities for future market growth.
DeFi: a new force reshaping traditional finance
Decentralized finance (DeFi) remains an important track in the crypto market. Its core lies in rebuilding traditional financial services through blockchain technology, including lending, trading and asset management.
Aave (AAVE) and Uniswap (UNI): As a leading decentralized lending protocol, Aave’s innovative flash loan function brings new possibilities to the DeFi market. Uniswap, as the benchmark for decentralized exchanges, simplifies the trading process of crypto assets through the automated market maker (AMM) mechanism. With the upgrade of the AAVE protocol and the advancement of UNI Chain, these two projects are expected to continue to attract more users and funds in the future.
Chainlink (LINK): As the leader of decentralized oracles, Chainlink plays the role of a data connector in the DeFi ecosystem. With the integration of traditional financial institutions and blockchain projects, Chainlink's application scenarios will continue to expand, and its market potential will also increase.
Bitcoin Ecosystem: The Key to Expanding Network Functionality
Bitcoin is not only digital gold, but its ecological development has gradually become a new hot spot in the market. Through the support of smart contracts, NFTs and decentralized applications, Bitcoin's functions and application scenarios are being redefined.
Stacks (STX): As a representative of smart contracts in the Bitcoin ecosystem, Stacks injects more scalability into Bitcoin by building decentralized applications (dApps) and is attracting more and more developers. of attention.
Ordinals and BRC-20: NFT and token standards in the Bitcoin ecosystem are gradually emerging. These innovations have empowered Bitcoin with more usage scenarios and promoted the activity of the entire Bitcoin network.
DePin (Decentralized Internet of Things): Empowering the Real World Economy
DePin (Decentralized Physical Infrastructure Networks) uses blockchain technology to provide decentralized management and incentive models for the Internet of Things, energy, sharing economy and other fields, and has become an important track for combining technology with practical economic applications.
Helium (HNT): Helium is committed to building a global decentralized wireless IoT network. Its unique incentive mechanism attracts the participation of a large number of nodes and forms a stable infrastructure network. In the future, as the demand for the Internet of Things grows, Helium is expected to occupy an important position in the DePin track.
IO.NET (IO): As an emerging force on the DePin track, IO.NET provides innovative solutions for the Internet of Things and network communications by building a decentralized communication infrastructure, and is expected to occupy a leading position in the DePin ecosystem in the future. important position.
RWA (Real World Assets): Connecting assets on and off the chain
The RWA (Real World Assets) track is committed to putting traditional financial assets (such as real estate, bonds, and stocks) on the chain through blockchain technology, thereby realizing the integration of traditional assets and encrypted assets. The potential of this field lies in the fact that on-chain asset management can significantly improve the efficiency and transparency of traditional finance.
MANTRA (OM): MANTRA is committed to providing investors with more diversified asset choices through DeFi tools and RWA support, and is rapidly rising in the RWA track.
Pendle (PENDLE): Pendle’s innovation is to allow investors to freely trade future income assets through time value tokenization, injecting more flexibility and liquidity into the RWA market.
AI and Blockchain: Deep Integration of Future Technologies
The combination of artificial intelligence (AI) and blockchain technology is providing new ideas for data management, smart contract optimization and decentralized AI market. The integration of the two not only injects new vitality into the encryption market, but also creates new technology application scenarios.
TAO (TAO): TAO focuses on the decentralized AI market and promotes innovation in the AI ecosystem by building an open AI development and sharing platform to provide developers with seamless collaboration and incentive mechanisms.
Worldcoin (WLD): WLD aims to achieve global decentralized identity authentication through biometric technology, providing a new direction for the integration of AI and blockchain, especially in the fields of data privacy and identity verification, which has far-reaching impact.
Conclusion: Bitcoin dances solo, opportunities for altcoins are brewing
The current market differentiation pattern is clear: Bitcoin, as the “King of Crypto”, dominates the market driven by institutional funds and market sentiment, while alternative coins are in the doldrums. However, this tilt in capital flows will not last forever. Judging from historical experience, Bitcoin’s periodic retracement in the bull market often heralds the coming rebound cycle of altcoins.
For investors, the rise of Bitcoin is exciting, but its profit potential is gradually being priced in by the market. Behind the sluggish prices of altcoins are hidden value projects that have not yet been revalued. Once money begins to flow back into these potential tracks, the explosion of altcoins may far exceed expectations.
What is even more noteworthy is that with the coming of the Trump administration, market policy expectations for the encryption industry have also rapidly increased. The Trump team has always been good at promoting economic growth and attracting investment, and its attitude towards the encryption market is more friendly. If more favorable policies are introduced in the future, such as encryption tax exemptions, incentives for enterprise blockchain applications, and a looser regulatory framework, this will inject new growth momentum into the Bitcoin and altcoin markets, and may even trigger a broader round of funding The return flow will drive the prosperity of the entire crypto market.
To plan for the future, you might as well wait for good opportunities. When Bitcoin’s rally takes a breather, the market’s focus may turn to those altcoins with technological innovation and practical application prospects. Emerging tracks such as RWA, DePin, and AI are nurturing the next round of growth momentum, and many high-quality projects are currently in the "discount range." With the potential promotion of favorable policies, the low ebb of the altcoin market may be the best layout window.
The story of Bitcoin’s dominance is continuing, but under the catalysis of the Trump administration’s policies, the chapter of alternative currencies may have a more exciting beginning.
(The above content is excerpted and reprinted with permission from partner MarsBit, original text link)
Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.
"Bitcoin is approaching the $100,000 mark. Should we "chase higher" or "buy more altcoins"? "This article was first published on (Block Guest).
