Altcoin Market Must Break 2021 Highs to Trigger Euphoria

Altcoin Market Eyes 16% Growth Before Major Breakout

Altcoin Market– The altcoin market must experience a 16% increase in total market capitalization before entering the “euphoric” phase, according to a crypto trader. This phase, often characterized by rapid price surges, is expected to begin once the TOTAL3 — the market capitalization of all cryptocurrencies excluding Bitcoin (BTC) and Ether (ETH) — surpasses its 2021 all-time high.

TOTAL3 Must Break 2021 Highs for Market Euphoria

Pseudonymous crypto trader Daan Crypto Trades shared his insights in a December 28 post on X (formerly Twitter), stating that the “euphoria” or “mania” phase will begin only when the TOTAL3 reaches new highs. Currently, TOTAL3 stands at $962.78 billion, a significant increase of about 91.45% since January 1, 2024. However, Daan emphasized that the market would remain volatile until the TOTAL3 surpasses its previous all-time high of $1.13 trillion from 2021.

“As long as this trades between ~$840B and ~$1.1T, I think it will be choppy,” Daan explained. He added that he would be more cautious if the market cap of altcoins drops below $800 billion, indicating that further volatility could follow.

Increased Volatility and Short-Term Focus in the Crypto Market

Some analysts suggest that the increased volatility in the crypto market may be attributed to traders adopting a more short-term perspective compared to previous years. Daniel Cheung, co-founder of Syncracy Capital, pointed out in a December 28 post on X that many traders have begun mimicking the strategies of traditional investors like George Soros. According to Cheung, these traders are focusing heavily on hourly charts and using leverage to time market entries and exits, which has resulted in slower breakouts for crypto tokens than in previous cycles.

Rotation Toward Altcoins as Bitcoin Dominance Wavers

As Bitcoin dominance hovers around 60%, with its price stalling in the final days of 2024, traders are shifting their focus toward altcoins. Over the past week, the top three gainers among the top 100 cryptocurrencies are:

• Bitget Token (BGB): +80.65%
• Virtuals Protocol (VIRTUAL): +42.30%
• Pudgy Penguins (PENGU): +31.63%

This shift indicates growing confidence in altcoins as traders believe the market might be moving away from Bitcoin in favor of higher-risk, higher-reward opportunities.

A Changing Risk-Reward Profile

Dyme, another pseudonymous crypto trader, suggested that altcoins currently offer a more attractive risk-reward profilethan Bitcoin. In a December 27 post on X, Dyme stated:

“Altcoins, at this juncture, offer a far more optimal R/R [Risk Reward] profile than Bitcoin does,” indicating that altcoins may present better opportunities for returns compared to the current Bitcoin market.

He also noted, “Time to DCA Bitcoin is over for another 1.5+ years,” suggesting that traders should avoid dollar-cost averaging into Bitcoin for the time being, and consider shifting their focus to altcoins.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.