As we close out 2021, altcoins like Ethereum (ETH) and Solana (SOL) are doing the heavy lifting. This is in stark contrast to previous end-of-year cycles where Bitcoin (BTC) was first to launch, later pulling altcoins along for the ride.
Not this year.
BTC traded back down to $56 000 this week, struggling to make it back above $60 000 after US Federal Reserve chair Jerome Powell warned of higher inflation and said the central bank would consider speeding up its tapering and tightening monetary policies.
This news did little to curb the growing enthusiasm for ETH, which broke new all-time highs on South African exchanges, breaking above R76 000 this week.
We pulled together some charts to explain what is happening. The first chart shows how ETH has outperformed BTC since late October and this week broke out of a pennant formation, signalling further strength for ETH in the coming weeks.
“ETH, as the second largest crypto asset by market cap, enjoys strong support from traders and investors who back it because of its dominance of the smart contract space, and because of its structural trade set up versus Bitcoin,” says Brett Hope Robertson, investment analyst at crypto platform Revix.
Ethereum outperforms Bitcoin
The chart below shows ETH’s extraordinary performance through the second half of 2021, with some analysts now projecting a price target of $10 000 within the next few months.
The next chart shows BTC’s waning dominance of the crypto space – it accounts for just 42% of the total market cap of all cryptos, as compared with more than 90% in 2017 and prior years. The last time it was at levels this low was in 2018 during the last BTC bear market. Hope Robertson says one should not discount BTC’s ability to reassert its dominance, as happened in the years after the 2018 BTC bear market.
Bitcoin dominance – BTC accounts for roughly 42% of the crypto market
Another useful chart for monitoring the crypto market cycle is the ‘fear & greed’ chart.
This week, the Fear & Greed index (which is based on multiple data sources) slipped to 21, which is in ‘Extreme Fear’ territory. A month ago the index was at ‘Extreme Greed’.
As the chart below shows, whenever BTC enters the ‘Extreme Fear’ territory it has been a reasonably reliable time to buy, as it has historically been followed by a market rally.
“A lot of people use the Fear & Greed index as help in timing their purchases of BTC as it has been quite reliable historically,” says Hope Robertson. “As Warren Buffett once said, ‘be fearful when others are greedy and greedy when others are fearful’.”
Bitcoin slips into fear territory
Another interesting chart shows the total market cap of the crypto market, excluding BTC (which has a market cap of $1.08 trillion). Including BTC, the total crypto market cap now sits at $2.6 trillion. Excluding BTC, the total market cap of all cryptos is $1.53 trillion and the figure is rising sharply.
“This is a sign that the crypto market is maturing, as it reflects the rise of altcoins relative to BTC,” says Hope Robertson. “There are thousands of altcoins and many of them will likely fail, but in the sea of failures, it’s possible to find the next Amazon.”
How to identify the winners
One way to identify winners is to invest one or more of the Revix crypto ‘bundles’, which take the guesswork out of identifying the best performing cryptos:
- The Top 10 Bundle, which spreads your investment equally over the 10 largest crypto assets as measured by market cap. This bundle is up 427% over the last 12 months.
- The Smart Contract Bundle, which spreads your investment equally over those cryptocurrencies behind the smart contract revolution that is challenging the traditional financial sector (smart contracts are self-executing pieces of code that allow you to borrow, lend, earn interest and make payments without an intermediary). This bundle appreciated 532% over 12 months.
- The Payments Bundle, which spreads your investment across five cryptocurrencies that are looking to revolutionise money and how value is transferred. This bundle is up 125% over 12 months.
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For more information, please visit www.revix.com
This article is intended for informational purposes only. The views expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any of the assets or securities mentioned herein. You should not invest more than you can afford to lose, and before investing, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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