Altcoins
Could altcoins be the new winners of the cooling crypto rally?
After coming close to $74,000 this week, bitcoin prices (BTC-USD) to have fell below $69,000 on Friday. Is the Bitcoin-led crypto rally starting to cool off after being hot in 2024?
Christopher Newhouse, DeFi analyst at Cumberland Labs, assesses the major crypto narratives as altcoins could show promise and demand more leverage from investors in the space.
“For something like meme coins, which are very popular and very interesting right now, I would like to say that these meme coin-focused investments are very attention-driven,” Newhouse told Yahoo Finance. “Whereas for some of these other altcoins and top 20 market cap layers, I would like to say it’s more narrative-driven. And in terms of thinking about timing, the narratives generally have a longer duration – being able to imagine what’s going to be hot in three months… six months… [or] 12 months.”
For more expert insights and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor’s note: This article was written by Luke Carberry Mogan.
Video transcription
[AUDIO LOGO]
RACHELLE AKUFFO: Another roller coaster week for Bitcoin. After approaching $74,000 on ETF spot demand, the rally has calmed down, at least for now. And as Bitcoin rallied and fell, altcoins followed suit.
To analyze Bitcoin’s movements and why altcoins should be your next crypto bet, Cumberland Labs DeFi analyst Christopher Newhouse is here. Thanks for joining me this Friday. So I want to first set the scene with what we’ve seen with Bitcoin’s movements.
Because obviously as Bitcoin evolves, we tend to see other tokens follow. But Bitcoin, and then hopes of a spot Ether ETF, are also really contributing to the rally here. What should we think of this pause that we are observing?
CHRISTOPHER NEWHOUSE: Yeah, first of all, thanks for having me, Rachelle. In terms of what sort of pause we’re looking at right now, I’d like to say that the things we’re looking for going forward will be specific narratives. You’ve seen a lot of performance in these alternative coins, in a lot of these different layers, in a lot of these narrative-centric tokens, outperforming the current market environment right now. And from my perspective, sure, we have this retracement, we have a potential pause in the majors, but there’s starting to be a lot of interest in specific altcoin narratives that are popping up.
I would like to say that some of the alt coins are very popular among the top 20 market caps, which, first of all, is an achievement in itself. The alternative coins currently moving are among the top 20 by market capitalization. These coins currently contain billions of dollars invested in these coins. Near, Avalanche, Ton, these are all the ones that have their own very specific narrative behind them. And I think that’s what’s currently driving the movement for some of the altcoin’s outperformance.
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RACHELLE AKUFFO: And I want to look at Filecoin, a coin that I’m looking at here. In what ways do you see this outperformance and what is really supporting it?
CHRISTOPHER NEWHOUSE: Yes, yes, so Filecoin, I would like to say, is part of the narrative known as decentralized physical infrastructure. And the physical infrastructure decentralized by Filecoin is storage. One of the hottest stories, I like to say, in traditional markets right now is going to be AI, right? And one of the biggest things I’m watching in traditional markets is the NVIDIA AI conference next week.
So the reason for the performance I would say for coins like Filecoin, Near, Render and some of these other more decentralized physical infrastructure tokens, they’re actually all focused on decentralized computing and decentralized storage. So from my perspective, with Filecoin at the forefront, they are focusing a little more on storage. So I would like to say that everything to do with storage, with decentralized computing, is why the outperformance happened so suddenly and so recently. This is because of the hot AI discourse taking place in traditional markets.
And now, being able to invest perhaps globally, I like to think about it from a different perspective: if you’re able to access and be exposed to traditional market narratives using digital markets digital assets themselves, it’s a more global and more global market. available. For people from different countries, being able to get pure exposure to AI, perhaps through NVIDIA, could be difficult. But being able to buy something like these tokens we mentioned perhaps provides access to the traditional narratives taking place in digital asset markets.
RACHELLE AKUFFO: And you bring up an interesting point about there being two baskets when you look at some of these pieces. Narrative, as you mentioned, but also timing. Who are the leaders there?
Because obviously you can have something like Dogecoin pop up because Elon Musk suggests that at some point more of it could possibly be used to buy Teslas at some point. You consider some of them an incident. How do you actually navigate these two baskets?
CHRISTOPHER NEWHOUSE: Yeah, yeah, so from my perspective, crypto is a very storytelling and attention-driven economy, and it really depends on how you separate the verticals. So for something like meme coins, which are very popular and very interesting right now, I would like to say that these meme coin focused investments are very attention focused. Whereas, for some of these other altcoins and layers in the top 20 market caps, I’d like to say it’s more narrative driven.
And in terms of thinking about timing, stories generally last longer. So, being able to suggest what’s going to be hot in 3 months, what’s going to be hot in 6 months, what’s going to be hot in 12 months, it’s something a little more oriented towards storytelling and perhaps- to be one of these largest market capitalizations. altcoins and layers are going to focus on this. Whereas with meme coins, it’s really about what’s hot in the next 7 days, what’s hot in the next 14 days, maybe what’s hot in 2 days.
And it’s just looking at the price action, the volatility, what’s happening in these specific meme coins as well. So I would like to separate the timing into two baskets. Is it a long-term narrative that will last for a while or is it an attention-driven narrative that will just be a flash in the pan?