ETH, XRP, LTC, and XLM staged a big rally over the last seven days, beating Bitcoin, which lost some ground, has caught some market observers by surprise–see Table 1.
Seven-Day Price Change For Major Cryptocurrencies
Source:Coinmarketcap.com 9/19/19 at 8:10 a.m.
The rally was broad, spreading across the whole market, with73 out of the top 100 cryptocurrencies advancing and 27 declining.
Number of Cryptocurrencies That Advanced/Declined In The Top 100 Ranks
What’s the surprise? Bitcoin usually leads rather than lag the broader market. What’s going on?
Patrick Devereaux, CFO of Illumnine, Corp, believes it’s the market roller coaster that pushes investors to cryptocurrencies. “It is impressive, how some tokens have seen more than a 40% increase in value over this past week,” he says. “A large part of this is related to continued consumer adaptation and user utility. The overall financial markets are a roller coaster ride, and it seems more new users are coming to the table.”
Alex Karasulu, Chief Executive Officer of OptDyn, believes it’s a big shift in the way they sea Bitcoin. “Personally, I think the dogmatism around Bitcoin as the ONLY viable cryptocurrency is starting to wear thin and we see an unexpected resurgence in altcoins,” he says. Bitcoin is a great store of value, but transaction rates are the worst in the industry at 7 transactions per second. There’s talk of several solutions but no action yet.”
That has diminished the effectiveness of the digital currency in carrying out transactions.
“It’s nowhere near being an effective money alternative due to tens of minutes required to verify a transaction on a good day,” he says. “It is not a medium of exchange yet, and for this reason, it cannot be a proper unit of account. All three, SoV, MoE, and UoA are key features of money. So, we might be back to thinking Bitcoin is old and crusty, and better alternatives to it may exist. If I’m right then, we should see a longer-term altcoin come back gradually.”
Chad Creighton,COO of My Lottery Store, believes the “alt season” has arrived. “When Bitcoin takes a breather, altcoins come out to play,” he says. “There is no doubt that “alt season” has been building in secret for some time and sooner or later that lid is going to pop, and the needle will move. With Bitcoin flatlining between bears and bulls for a while now, it only makes sense that traders are willing to shift to the very cheap alt currencies.”
Still, Creighton believes that it’s too early to bet on altcoins at this time. “Although Bitcoin didn’t break out as has been expected from earlier in the week, its social sentiment is extremely high right now,” he notes. “With both social volume of posts and social engagement increasing day-to-day, we may not be where some people want to think we are.”
That’s why he recommends patience. “Everyone wants “alt season” to make its grand entrance, but the reality is this is normal for our industry,” says Creighton. “A 20-30% jump one week might end up with a follow-up week of a 20-30% drop. Keep calm, no Fomo, and HODL. We’ll all know a breakout when we see one.”