There is currently controversy among investors in the crypto scene as to whether 2021 is the year for altcoins. Will alternative cryptocurrencies manage to build their reputation and value in the face of the strengthening Bitcoins to trump the crypto top dog? This question will be discussed in the following articles.
At this point in time, the market capitalisation of Bitcoins comes to $650 billion, which is 2.16 times compared to the previous cycle and an astonishing multiplication. At that time, the total market capitalisation including altcoins was $500 billion; based on this comparison, it should be clear how steep the rise of cryptocurrencies in general has been in recent years. Learn more about crypto trading here.
What are altcoins?
They are alternative currencies that exist alongside Bitcoins. When these altcoins outperform bitcoins by a significant amount, we talk about the so-called alt season. If, for example, 75% of all top 50 cryptocurrencies perform much better than Bitcoin over the course of the last month, this can be referred to as an alt season or altcoin season. In this context, Bitcoin’s dominance is declining given its market capitalisation. The current dominance of Bitcoins comes to about 70% of the market capitalisation for all existing cryptocurrencies. The other altcoins take up about 30% of the market capitalisation. Today, investors can easily buy and sell altcoins like Polkadot.
The last crypto cycle 2017/2018
The last crypto cycle came between 2017 and 2018. This is where altcoin and bitcoin all-time highs occurred. In this cycle, bitcoin’s dominance at time value dropped to around 35%. Rightly, this case can be considered the Altcoin Season. The whole thing lasts about six months, after which bitcoins manage to achieve significant dominance, quickly rising above 50 %.
Bitcoin and the market capitalisation rose enormously in 2021. To some extent, bitcoin was able to outperform, yet it lacks the base across the board and in the long run for the significant outperformance compared to bitcoin. This has underlined the breadth and strong dominance of bitcoin. Parallels to 2017/2018 are there, as Bitcoin reached a market cap then that almost reached $300 billion.
The current market capitalisation of bitcoin and altcoin
The market capitalisation of all altcoins has reached $300 billion and has increased 0.6 times compared to the previous cycle. Currently we are not yet in an altcoin season, the current time or phase can be called bitcoin season, bitcoins still hold the vast majority of the market capitalisation.
The dewy-eyed investors in cryptocurrencies first recalculate their returns in so-called fiat currencies, such as euros and US dollars. Regardless of which coen the fiat holdings are invested in, these investments should be maximised at all costs. In this case, it is perhaps a matter of finding the most profitable cryptocurrencies at this point in time in order to reap maximum profits. It is therefore interesting to see how 2021 will develop.
It is typical to orientate oneself on the number of favoured cryptocurrencies and to set them higher. By speculating on altcoins in the short term, the goal is to increase the bitcoin position. In the optimum, you exchange Bitcoin for Altcoin and make profits. Today, many current circumstances speak against an incoming altcoin season, such as the capital inflows directly into the crypto market. Based on this, Bitcoin is considered very safe and has a store-of-value that can be compared to gold. The community and the media are partly assuming a repetition of the crypto cycles. These are characterised above all by the run on Bitcoins, which always occurs with a slight delay. The phenomenon is considered to be extraordinarily well-known and widespread. Unlike the last hype, today many different crypto exchanges also offer altcoins for sale and purchase. Investors therefore have the opportunity to react as quickly as possible and get the most out of their investments.
