Last May, as Bitcoin Fell, Smaller Altcoins Jumped Dramatically
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Something strange happened towards the latter half of May this year. While bitcoin and Ethereum – two of the largest and most mainstream digital currencies – were taking price dips, altcoins – like XRP (Ripple) and Litecoin – were exploding.
Altcoins Rose Last May While BTC Suffered
During that time, Litecoin and Ripple endured price hikes of about five percent each, while others – like Sandbox – rose by as much as four percent. Axie also saw its price shoot up by a whopping eight percent. These numbers may not seem like much, but it’s unusual and interesting that this would happen, as these currencies often need to see bitcoin go up before they can follow suit.
The fact that they were able to travel in an entirely different price direction suggests that maybe the correlation between these assets and something larger like their daddy bitcoin are starting to thin out.
Some analysts believe this may have been the start of what they’re calling an “altcoin season.” This is typically when people (traders, investors, etc.) start to shift some of their attention away from larger, mainstream tokens like BTC and focus on smaller assets. As a result, these coins endure certain price hikes on a temporary basis, while some of the larger ones sink deeper into oblivion.
Still, the idea remains amongst many retail traders that bitcoin and Ethereum are “flight-to-safety” tokens, meaning that should things go wrong with the smaller tokens they invest in, they can always sell and allocate more of their wealth and portfolios to the latter two, thus bringing their statuses higher and giving themselves more stability.
One might assume that so long as bitcoin is there for them to enjoy, these investors feel safe enough to try other smaller coins out. Noelle Acheson – author of the “Crypto is Macro Now” newsletter – said that despite all this, volatility remains a problem in the industry at press time. She commented:
Like macro markets, juggling resilient stock prices with increasingly bleak economic data points, the crypto market is also dealing with duality. There are some signs of frothiness.
She also mentioned that despite the traction surrounding the mentioned altcoins, activity remains relatively low for these and other less-known digital currencies, and that in the long term, prices are still down and haven’t quite recovered from the 2022 bear market. She commented:
In spite of these hints of froth, activity is low. Prices are down more than ten percent on the month, and volumes are trending lower.
BTC Is Not in the Best Place
Bitcoin and Ethereum are also largely down despite small price jumps over the past five months.
BTC, for example, was trading in the mid-$16K range at the end of 2022. At the time of writing, the asset has moved into the $27K region, though this doesn’t compare to the $68,000 all-time high it achieved two Novembers ago.
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