The smaller cryptocurrency is starting to overtake record-setting Bitcoin as traders look to see the token test its next all-time high.
The index, which tracks the bottom half of the top 100 digital assets, rose about 60% last month, outpacing Bitcoin's 56% rise.In the same period, the total value of tokens surged by more than $800 billion, according to data tracker CoinGecko.
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Market observers say there are increasing signs that speculators are turning away from the biggest digital assets to smaller rivals that have lagged behind the Bitcoin-led cryptocurrency recovery that began last year.
“Our desk has seen strong flows and more excitement for non-Bitcoin assets recently,” said David Rowant, head of research at crypto prime broker FalconX. At one time, five times more investment was flowing into Bitcoin than second-place Ether, but that has now fallen to twice that, he said.
Advantages of Bitcoin
Coins like Ether are still a long way from reaching all-time highs, but this comes amid the launch of a groundbreaking US exchange-traded fund for the token and a decline in future supply growth. This reflects the focus on coins.
“Bitcoin’s market power typically reaches its peak several weeks after breaking through all-time highs,” Vettle Runde, senior analyst at K33 Research, wrote in a note. He added that increased betting on altcoins is a typical feature of the “all-gas, no-brakes phase of the market.”
Frothy bets on Bitcoin are driving the derivatives sector as evidenced by indicators such as soaring perpetual futures costs and unprecedented levels of open interest (i.e., outstanding contracts) in Chicago-based CME Group's Bitcoin futures market. It's all over the place.
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futures demand
This is also a positive backdrop for small digital assets, according to Jag Cooner, head of derivatives at cryptocurrency exchange Bitfinex.
“The surge in open interest will eventually be reallocated to altcoins as market focus moves away from Bitcoin and further off the risk curve towards meme tokens, which accounted for a third of volume on major exchanges last week. “This is expected,” Cooner wrote. With notes.
Meme coins Shiba Inu, Floki, dogwifhat, Pepe, and Bonk sit at the top of CoinGecko's seven-day performance chart, rising nearly 150% as of 9:20 a.m. in London on Wednesday. Bitcoin was trading at $67,250, just shy of the $69,192 it hit in U.S. trading on Tuesday.
While crypto veterans may justify the meme trend as part of an axis beyond Bitcoin, others may see it as ill-advised speculation.
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