Key Takeaways:
- Cardano (ADA), Solana (SOL), Polkadot (DOT), and Algorand (ALGO) surge as the market experiences “capital rotation” following a slowdown in Bitcoin price.
- Bitcoin could revisit the price gap formed on the CME futures exchange at $39K.
- Cardano reached its highest valuation since August 2022 at $0.57.
Friday witnessed a surge in the value of tokens tied to layer-1 blockchains as the price of Bitcoin (BTC) steadied ship, rotating capital to the altcoin market.
ADA, the cryptocurrency powering smart contract blockchain Cardano, was the day’s top performer, as its price surged by 25% to $0.57 – its highest valuation since August 2022. Although Cardano gave up some of its gains later in the day, it was still up almost 20% today.
Bitcoin was moving between $43,000 and $44,000 throughout the day, after shaking off a minor dip following reports that US unemployment numbers fared better than projections. The latest jobs report was bullish for those expecting the Federal Reserve to cut interest rates next year.
Crypto Market Experiences Capital Rotation as Traders Turn Focus to Altcoins
The world’s most valuable cryptocurrency was trading at around $43,800 at the start of the day, only to consolidate as investors digested its swift rally to the $45,000 mark this week following the breakout from $38,000 last week.
Meanwhile, altcoins surged across the board due to the “altcoin rotation” phenomenon, which occurs when a slowdown in Bitcoin price momentum drives traders to realize gains and invest in cryptocurrencies with smaller market caps.
This capital rotation is common in the crypto market after Bitcoin experiences a large run-up, followed by a rally of bigger cryptocurrencies then among meme tokens, and finally, small-cap crypto as traders go on the hunt for assets that are yet to move to the upside.
Apart from Cardano (ADA), the native tokens of Algorand (ALGO), Avalanche (AVAX), Polkadot (DOT), and Solana (SOL) blockchains also posted gains ranging from 7% to 11%, respectively.
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What Does This Mean For Bitcoin?
As the price momentum of Bitcoin came to a halt, some analysts speculate that the cryptocurrency could experience a potential pullback to retest lower price levels.
Crypto analyst Willy Woo expects BTC to trade between $39,000 and $41,000. He made his projection based on the price gap in the Chicago Mercantile Exchange (CME) Bitcoin futures market, which currently stands at $39.7K.
This gap is because, unlike crypto exchanges like Binance or Coinbase, the CME futures market doesn’t trade around the clock. This means that there could be a difference between the closing and opening prices of Bitcoin, which depends on the token’s price action when the CME stopped trading for the day.
Analysts say that Bitcoin tends to revisit these levels during a price correction, thus filling the “gap”. Bitcoin rallied to $40,000 last week after the CME futures market closed, creating a price gap on the chart.
According to his estimations, 28 out of 30 gaps (98%) have so far been filled on the CME daily candles. However, it should be noted that these gaps don’t always get filled. Bitcoin is yet to revisit the CME gap formed around $20,000 during the weekend of the Silicon Valley Bank (SVB) collapse in March.
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Crypto Expert Says Bitcoin Could Beat its All-Time High In The Next 18 Months
While speaking to CoinDesk TV, Hany Rashawan, the co-founder and CEO of digital asset management firm 21.co, said the potential short-term pullback for Bitcoin still provides a bullish outlook as there is growing interest in cryptocurrency among institutional investors.
He argued that market observers are “underappreciating” future inflows into Bitcoin if all BTC spot exchange-traded fund (ETF) gets approved in the United States, which is likely to happen in Q1 2024.
Rashwan noted that there are a lot of prospective buyers of Bitcoin, who have been prohibited from investing in the asset due to regulations. He also pointed out that 75% of inflows into digital asset funds in 2023 took place in the past 69-90 days, which he says is “not normal” and is a “sign of change in sentiment across primarily institutional players.”
The cryptocurrency expert predicts Bitcoin to beat its all-time high “sometime in the next 12-18 months.”
At the time of writing, Bitcoin (BTC) is trading at $43,854 – up 1.5% in the last 24 hours.
