Altcoins are experiencing a resurgence, with investor interest shifting towards various types of digital assets like meme coins, AI-related projects, dog-themed coins, and cat-themed coins. This trend continues despite Bitcoin reaching a new all-time high of $72,000.
Analysts at Bitfinex, a crypto exchange, noted in their latest weekly report that investors are increasingly diversifying their interest towards meme coins and AI projects within the altcoin sector.
Rising Interest Fuels Altcoin Market Cap Surge
Total3 Index Market Cap Reaches New High: The growing interest in altcoins is evident in the market cap of the Total3 Index, which tracks the price performance of all cryptocurrencies excluding Bitcoin and Ether (ETH). Initially hovering around $640 billion, the index’s market cap has surged to a new high of $720 billion, marking a significant milestone in this cycle.
Significant Growth Despite All-Time High Gap: Although the index’s market cap remains 33% below its peak of $960.78 billion in November 2021, it has made substantial progress from the bear market levels of $450 billion. This illustrates a notable increase in altcoin interest and investment over time.
Driving Forces Behind Altcoin Resurgence: AI-related projects, meme coins, dog-themed coins, and cat-themed tokens are among the key factors driving the resurgence of altcoins. Bitfinex reported that meme coin and AI indices on Coingecko have surged by 32% and 38% respectively in the last seven days. Notably, cat-themed coins have witnessed a remarkable 64% gain in the past week, accumulating a total market cap of over $750 million.
Ethereum Activity Drives Altcoin Market Cap Increase: The rise in the altcoin market cap coincides with increased market activity on Ethereum, resulting in higher transaction fees not observed in nearly two years. Ethereum’s fee revenue is projected to exceed $10 billion annually, with over $190 million collected in the past week alone.
Bitcoin’s Surge Brings Risks for Traders
Potential Liquidations Loom: Bitcoin’s surge to $72,800 on March 11 could spell significant liquidations for both long and short-positioned traders. Similar scenarios have occurred in previous attempts by the asset to surpass its last all-time high of $69,000.
Warnings from Bitfinex: Bitfinex cautioned that BTC traders may encounter increasingly leveraged and volatile markets in the near term. The extent of this risk was highlighted on March 5, when Bitcoin rallied to $69,000 before plummeting to around $59,000 within four hours, resulting in $1.18 billion in long and short liquidations.
Risk Even for Correctly Positioned Traders: Analysts emphasized that even traders positioned correctly in the markets could face liquidations due to sharp price movements like those observed last week.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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