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Bitcoin Price Crushing Altcoins Heading Into U.S. Election. Is There an Alt Rally Coming After?

Altcoins have lagged throughout the year amid regulatory uncertainty, and hence, K33 Research analysts said they are "more sensitive" to the election results.

Updated Nov 5, 2024, 6:40 p.m. Published Nov 5, 2024, 6:40 p.m.
BTC, SOL, ETH and CD20 price performance over the past week (CoinDesk Indices)
BTC, SOL, ETH and CD20 price performance over the past week (CoinDesk Indices)
  • Bitcoin's dominance over the crypto market rose to a fresh high of 60.6%, the strongest since April 2021, as smaller cryptos, including ETH and SOL, underperformed during the recent pullback.
  • Altcoins' struggle against bitcoin could persist in the mid-term due to a lack of major catalysts, Bitfinex analysts said.
  • Coinbase's head of research said a favorable macroeconomic background into 2025 will provide a tailwind for the whole digital asset class, including altcoins.

Bitcoin’s grip on the whole digital asset class rose to a fresh 3.5-year high on Tuesday as alternative cryptocurrencies, or altcoins continued to struggle against the leading crypto with the U.S. election looming over the market.

While BTC was down less than 4% from last week's near-record high of over $73,000, large-cap altcoins like Ethereum's ether and Solana's native token both dropped nearly 10% from their recent highs. The broad-market CoinDesk 20 declined nearly 6%

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Smaller cryptos fared even worse, as the combined market capitalization of altcoins excluding the top 10 largest cryptos, shown as OTHERS on TradingView, plummeted to the lowest relative to bitcoin since early 2021.

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The price action propelled bitcoin’s market cap dominance, which measures BTC's share of the total crypto market capitalization, to 60.6%, its strongest level since April 2021.

Market cap of tokens excluding the top 10 largest (OTHERS) tumbled to fresh lows in early November vs. a bitcoin's market cap (TradingView)
Market cap of tokens excluding the top 10 largest (OTHERS) tumbled to fresh lows in early November vs. a bitcoin's market cap (TradingView)

"Altcoins are now seeing severe drawdowns whenever BTC pulls back," Bitfinex analysts said in a Monday report.

"With BTC absorbing most of the capital flow into crypto assets, altcoins are struggling to keep up, and without a fresh catalyst, their prospects for a comeback in the near-term appear slim," the authors added.

Speculative interest that supported altcoin outperformance during brief periods have vanished, as funding rates on perpetual futures markets normalized, the report noted.

Bitcoin's winning streak against alts may continue for a while, Bitfinex analysts forecasted.

"We believe that the altcoin market may experience further declines relative to bitcoin in the mid-term, primarily due to the apathy of speculators."

Read more: Bitcoin Likely to Rally After the U.S. Election, Irrespective of Who Wins, History Shows: Van Straten

Regulatory uncertainty weighs more on altcoins

Altcoins have lagged through this year against bitcoin, in part because of their regulatory ambiguity, K33 Research noted in a Tuesday report. This means that the election results and the perceived outlook for digital asset regulations will matter more for smaller cryptos than BTC, the report added.

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"Bitcoin’s attributes and wide availability position it to thrive in the medium term, regardless of the [U.S. election] outcome," K33 Research analysts Vetle Lunde and David Zimmerman said. "For altcoins, the election is more sensitive,"

"This implies that the medium-term path dependency in alts should be more sensitive to the election than BTC," they added.

Macro strength could provide a tailwind

The elections, and the uncertainty around the outcome weighing on the market, might as well be the inflection point for altcoins starting to catch up with bitcoin, according to David Duong, head of research at Coinbase.

"I would expect bitcoin dominance to start to kind of plateau here as altcoin names are probably going to take more of a front seat due to the fact that people are going to play them more because of the elections," said Duong in an interview with CoinDesk.

He said the election will be a catalyst for crypto prices but likely won’t have an outsized impact, as favorable macro conditions will provide a tailwind to the whole asset class.

"I would actually say I'm fairly optimistic through probably early to first half of the first quarter of 2025, in part because I think we're in a very strong macro environment and it's been very favorable,” he said. “I do think that we're gonna see us benefit from the elections as well, regardless of who wins."

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Exchange Review - March 2025

Exchange Review March 2025

CoinDesk Data's monthly Exchange Review captures the key developments within the cryptocurrency exchange market. The report includes analyses that relate to exchange volumes, crypto derivatives trading, market segmentation by fees, fiat trading, and more.

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Trading activity softened in March as market uncertainty grew amid escalating tariff tensions between the U.S. and global trading partners. Centralized exchanges recorded their lowest combined trading volume since October, declining 6.24% to $6.79tn. This marked the third consecutive monthly decline across both market segments, with spot trading volume falling 14.1% to $1.98tn and derivatives trading slipping 2.56% to $4.81tn.

  • Trading Volumes Decline for Third Consecutive Month: Combined spot and derivatives trading volume on centralized exchanges fell by 6.24% to $6.79tn in March 2025, reaching the lowest level since October. Both spot and derivatives markets recorded their third consecutive monthly decline, falling 14.1% and 2.56% to $1.98tn and $4.81tn respectively.
  • Institutional Crypto Trading Volume on CME Falls 23.5%: In March, total derivatives trading volume on the CME exchange fell by 23.5% to $175bn, the lowest monthly volume since October 2024. CME's market share among derivatives exchanges dropped from 4.63% to 3.64%, suggesting declining institutional interest amid current macroeconomic conditions. 
  • Bybit Spot Market Share Slides in March: Spot trading volume on Bybit fell by 52.1% to $81.1bn in March, coinciding with decreased trading activity following the hack of the exchange's cold wallets in February. Bybit's spot market share dropped from 7.35% to 4.10%, its lowest since July 2023.

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Consensus 2025: Zak Folkman, Eric Trump

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  • Ethena's USDe becomes fifth stablecoin to surpass $10 billion market cap in just 609 days, while Tether's dominance continues to slip.