Altcoins
Is now the time to invest in altcoins? Chain link analysis shows…
- Altcoins with market caps below $10 billion are showing signs of upcoming buying opportunities.
- Chainlink (LINK) could be on the verge of recovery, as indicated by increased large transaction activity.
The altcoin market has seen a slowdown so far over the past few months. After reaching a peak market cap of $1.27 trillion in March, this segment of the crypto market has since declined by over 8%, now valued at $1.061 trillion at the time of writing.
This decline has been quite visible across all aspects of the altcoin market.
According to Jamie Coutts, chief crypto analyst at RealVision, small-cap crypto assets have significantly underperformed since Bitcoin [BTC] reached new highs earlier this year
In a detailed analysis shared on social platform
Jamie Coutts suggests that the recent downturn could be a typical mid-cycle correction within the broader cryptocurrency market cycle, which historically opens up buying opportunities.
As the market begins to stabilize, these small and mid-cap cryptocurrencies could provide valuable entry points for discerning investors. This perspective is critical as it sheds light on potential recovery trajectories, suggesting a glimmer of hope after the market storm.
Analytical Breakdown: Industry Performance and Forecasts
Jamie Coutts, shares data crypto tracking service Bitformance indicates a stark contrast in performance between different crypto sectors.
Over the past three months, while the top 200 equal-weighted index – which assigns equal weight to cryptocurrencies regardless of their market capitalization – has declined by more than 30%, the market cap index has seen a smaller decline, highlighting the resilience of larger cryptocurrencies like Bitcoin and Ethereum.
Source: Jamie Coutts
In particular, Bitcoin and Ethereum [ETH] showed declines of only 11% and 5%, respectively, demonstrating their stability compared to the broader market. Among sectors, tokens and infrastructure projects linked to the Metaverse were hit the hardest, with declines of almost 44%.
This significant slowdown across various sectors highlights the vulnerability of some altcoins during times of market stress, but also highlights the potential for recovery in a stabilizing market.
Coutts’ analysis delves deeper into the specifics of these sectors, providing a clear picture of where the market stands and what could lie ahead. He noted:
“If this is a regular mid-cycle correction that we are experiencing, which I think is likely, then expect opportunities to present themselves in mid and small caps once the market will have stabilized.
Case Study: Chainlink’s Market Position
To assess whether smaller altcoins, especially those with market caps below $10 billion, are ready for a rally, it is worth looking at a specific example from this category.
Chain link The LINK token, with a market capitalization of just over $9 billion, provides an ideal case study to explore the potential for an uptrend.
Currently, Chainlink is trading at $15.31, reflecting a 1.4% decline over the past 24 hours and a larger 12.4% decline over the past week.
This slowdown was mirrored in its number of active addresses, which has decreased significantly, from more than 90,000 in March to less than 60,000 today.
Source: Glassnode
This reduction in active addresses generally indicates a lower level of user engagement, which can harm the price stability and growth prospects of the token.
Additionally, LINK open interest, which represents the total number of outstanding derivative contracts that have not been settled, saw an increase notable decrease by 40% in the last 24 hours.
Source: Coinglass
There is, however, a positive side with a modest increase of 0.52% over the same period. This mixed signal in open interest could suggest uncertainty in the market, but also indicates some resilience among investors.
Despite these challenges, there is a glimmer of optimism. The number of large transactions involving LINK, especially those exceeding $100,000, increased significantly, from less than 90 at the start of the week to more than 200 on June 12.
Source: In the block
Realistic or not, here it is Market capitalization of LINK in BTC terms
This push, as shown in IntoTheBlock datasuggests that despite the general market slowdown, large investors, or “whales,” are actively accumulating LINK, potentially in anticipation of future price increases.
Additionally, AMBCrypto has signaled a potentially bullish future for LINK, citing a relative strength index (RSI) below 63, which traditionally indicates that a strong uptrend is forming.