Tom Lee, founder of Fundstrat, remarked that the crypto market may be heading towards a phase where small-cap cryptocurrencies will start to outperform larger-cap coins.
In a recent interview on the Wealthion podcast with SkyBridge Capital founder Anthony Scaramucci, Lee shared that his company has started introducing Ethereum (ETH) and Solana (SOL) to clients as a way to mitigate risk from focusing solely on Bitcoin (BTC).
As the head of research at Fundstrat, Lee stated that investors holding altcoins are likely to gain some advantages as the market continues to develop.
"We have advised our clients that if they do not want to invest solely in Bitcoin, they may consider a portfolio that includes Bitcoin, Ethereum, and Solana, as we view these coins as core assets in the cryptocurrency portfolio."
"We are also entering a phase that I think is the altcoin season. Next year could be the time when the crypto market expands, and this is when true cryptocurrency experts will have the opportunity to achieve superior profits, as this is the phase where many altcoins can perform very well."
"I believe that the stronger Bitcoin grows, the stronger the crypto ecosystem becomes. Therefore, many utility tokens and tokenization projects will really begin to create greater value and gain more expectations."
The crypto market is witnessing a clear transformation as the Altcoin Season Index has risen to 73, very close to the 75 mark that signifies the onset of altcoin season.
Altcoin Season Index | Source: Blockchaincenter
Bitcoin's dominance rate has seen a decline from 60% to about 53% at the time of writing, indicating increased interest from investors in altcoin varieties.
The increase in this index reflects strong momentum for altcoins, driven by significant price volatility of coins such as Ethereum (ETH), XRP, and Solana (SOL)... As of the time of writing, 38 out of the top 50 cryptocurrencies have outperformed Bitcoin (BTC) over the past 90 days, sparking widespread optimism in the market.
In history, such changes often occur when Bitcoin reduces its dominance, creating opportunities for altcoins to thrive.
The trajectory of the Altcoin Season Index currently indicates a shift from the Bitcoin dominance phase earlier this year to a more diverse market, where the participation of altcoins is increasingly strong.
In the interview, Lee also noted that the possibility of Bitcoin increasing another 150% after the current strong rally is quite feasible.
"In the next 12 months, I think Bitcoin could reach a price above $250,000 and possibly even higher if the current bull cycle continues. Another important factor that makes me optimistic about Bitcoin's price potential is the change in policy of the new administration, as they are building a strong supportive foundation for Bitcoin. I believe that the likelihood of the United States not only legalizing Bitcoin but also recognizing it as a strategic reserve asset is very high, and this will create extremely positive price scenarios for Bitcoin in the future."
"If the U.S. government ultimately holds one million Bitcoins, they will become the largest Bitcoin holder in the world and create a significant positive impact on the process of legalizing Bitcoin."
"This is similar to the strategy that MicroStrategy has adopted. MicroStrategy has proven that using Bitcoin as an asset on the balance sheet not only benefits the company but also creates significant value for shareholders."
