Positive and consistent performance from altcoins over the past six days is fostering optimism and positioning Bitcoin for a potential test of $46,000, according to analysts. The outperformance of altcoins relative to Bitcoin and Ethereum suggests a broadening of investor interest beyond the two leading cryptocurrencies.
The total crypto market capitalization has rebounded from $1.61 trillion to $1.74 trillion within a week, with alternative cryptocurrencies like SOL (Solana), AVAX (Avalanche), and ICP (Internet Computer) leading the market recovery. Solana’s SOL has notably surged by 27% to reach $103, reversing losses observed after the debut of spot-based Bitcoin exchange-traded funds (ETFs) on January 11. The rally is attributed to heightened user interest in Solana-based trading aggregator Jupiter, where volumes exceeded $500 million, surpassing activity on decentralized exchange Uniswap.
AVAX, the native token of Ethereum competitor Avalanche, has seen a robust 25% rally in just one week, while other tokens such as ICP, NEAR, DOT, and XMR have recorded gains ranging from 13% to 22%.
Bitcoin, the largest cryptocurrency by market value, has gained nearly 10%, trading above the widely monitored 50-day simple moving average at $42,870. Analysts note that Bitcoin’s move above this average is significant, indicating potential bullish momentum, although some caution that it may not yet be solid evidence of a sustained uptrend.
In contrast, Ethereum’s native token, Ether (ETH), has experienced a more modest 0.6% increase. This underperformance is attributed to market makers trading against the direction of the price move, curbing upside price volatility.
As the market focuses on the U.S. Federal Reserve’s rate decision on Wednesday, analysts suggest that potential dovish hints could bode well for Bitcoin. The central bank is expected to maintain the benchmark borrowing cost between 5.25% and 5.5%, with markets anticipating a first rate cut in May instead of the previously expected March. The Fed’s tone is crucial, with a dovish shift possibly boosting risk appetite and directing more capital into Bitcoin and related ETFs. Analysts caution that sustained demand for smaller altcoins or meme coins may not materialize this year, typically occurring after a prolonged bull market.