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In the first phase, Bitcoin was the protagonist.
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In phase 2, alternative cryptocurrencies would begin to come to the fore more.
With bitcoin (BTC)’s sharp bullish trend taking it to new all-time high prices, enthusiasm is spreading in the overall Cryptocurrency market. Several are at their highest trading levels of the year, while others have set new records.
According to a Blockchain-letter/escape-velocity/” target=”_blank” rel=”noreferrer noopener”>report from the investment company Pantera Capital, made by analyst Cosmo Jiang, The cryptoasset market is entering phase 2 of the bull cycle. Accordingly, it is expected to continue generating positive returns, with altcoins standing out over bitcoin.
This explains that bullish cycles have historically had two pronounced stages. Phase 1 is the initial stage of the rally in which bitcoin outperforms the rest of the market. And 2 is the last period of the bullish cycle in which altcoins (crypto assets excluding BTC) outperform.
Besides, phase 1 is characterized by a greater growth in the capitalization of bitcoin than that of altcoins, while phase 2 on the contrary. This second scenario is repeating itself again today, with the recent widespread rally in altcoins.
“Now we see the first signs that we are in that second phase of the rebound, which has been catalyzed by the US elections,” comments the Pantera Capital analyst. This can be seen in the following graph, which shows the total capitalization of crypto assets and the participation of altcoins.
Total capitalization of crypto assets (white line) and dominance of Altcoin capitalization (orange line). Source: Pantera Capital.
The Pantera Capital report also highlights that the growth of altcoin capitalization has been so great in phase 2 during the last two bull cycles that, If you add to its performance in phase 1, it is still higher than that of bitcoin.
Precisely, in phase 1 of the last two bullish cycles, the capitalization of bitcoin dominated 89% and 78%, respectively, of the total market. Then, in phase 2, altcoins led around 67% in both cycles. Given this, the total dominance of altcoins during the two cycles ended up being 65% and 55%, as the graph shows.
Bitcoin capitalization growth vs. of altcoins in recent bullish cycles. Source: Pantera Capital.
“There are many reasons to be optimistic”
Jiang warns that currently “there are many reasons to be optimistic about the digital asset market.” The lack of regulatory clarity is one reason why investors They do not enter the market and that will soon be behind us, he warns.
“This year has been one of the most constructive for the cryptocurrency industry, marked by significant progress in price action, market structure milestones, and fundamental changes in the regulatory and political landscape. From the passage of FIT21 and the election of the first pro-crypto president to the successful launch of ETFs, we are seeing a convergence of capital, innovation, regulation and renewed optimism.”
Cosmo Juang, general partner of Pantera Capital.
The specialist emphasizes that the incoming US Congress is the most pro cryptocurrencies that has been seenwith the majority of newly elected House representatives and senators taking an industry-friendly stance.
Furthermore, he maintains that support for the ecosystem in the presidential elections, which candidate Donald Trump won, was the decisive vote. With this, since its victory, bitcoin has been recording new all-time high prices.
“An enthusiastically pro-cryptocurrency White House, combined with favorable majorities in both chambers, should create the best possible environment for constructive legislation on cryptocurrencies,” distinguishes the analyst from the specialist company.
In this sense, Pantera Capital predicts a good time for cryptoactive investors. This look coincides with the optimistic forecasts which, as CriptoNoticias reported, are currently abundant in the market by 2025.
Clarification: This article is written for informational purposes. It does not constitute an investment recommendation or financial advice.
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