On November 13, Bitcoin hit $92,000, and the total market value of cryptocurrencies reached $3.2 trillion, both breaking record highs. This round of carnival was only about Bitcoin and memes, while altcoins did not keep up with the rise at all.
There are two main reasons for the poor performance of altcoins:
The market is not buying into the token economic model of new projects with low MC and high FDV, and is instead investing in meme coins
No killer app this time
The following figure shows the market share of Bitcoin BTC.D, which is currently as high as 61%, the highest in three and a half years. Will BTC.D continue to rise? Can the above reasons for the downturn be solved in this cycle? Is there another copycat season?
The logic behind the rise of altcoins
We are currently in the early stages of a rate cut cycle, which means that the United States is releasing more liquidity to risk markets, and the capital transmission route is directional. From the very beginning, when traditional real estate prices rise, funds will overflow into the stock market. When the stock market reaches a certain market value, excess funds will flow into mainstream crypto assets (BTC/ETH/SOL). When mainstream crypto assets rise and meet market value requirements, funds will flow into the altcoin market with a smaller market value, thereby pushing up the prices of altcoins.
You can imagine that the above asset categories are all basins from large to small. When enough water is poured in to fill the upper basins, the water will naturally overflow into the smaller basins below. This capital flow path shows that capital will follow the characteristics of market liquidity and flow from relatively low-risk, large-volume assets to higher-risk, smaller-volume assets.
Therefore, the prerequisite for the rise of altcoins is that Bitcoin must rise first, until it can no longer rise, and funds are willing to flow out of Bitcoin and buy altcoins.
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