The altcoin market capitalization has launched into new all-time highs and this is the right time to consider the resurgence of DeFi tokens and a DeFi led altcoin rally. If the current altcoin market is cyclic, altcoins would make a comeback and start a price rally, led by DeFi tokens. In the current market cycle, altcoins are moving faster than Bitcoin, offering double-digit returns to retail traders.
Exchange inflow for most altcoins and stablecoins like USDC, BUSD, and SUSHI has hit a monthly low based on data from Glassnode. Since the liquidity is low, there is low volatility, however, this is the best time to stack altcoins, based on the contrarian view. If the trade volume for an altcoin is increasing, and the liquidity is low, it is likely that the selling pressure would drop, and the price would increase in the short-term. Buying pressure is currently building up on SUSHI, AAVE, and ETH. Higher buying pressure is the equivalent of an increasing price and a rally in the short-term.
Since Bitcoin is rangebound post its new ATH, if it trades sideways, DeFi tokens may lead the altcoin rally, with Ethereum following closely as the next upgrade goes live soon. Ethereum’s mining difficulty hit an ATH yesterday based on data from Glassnode, and in the past, this has corresponded with an upcoming breakthrough in the altcoin’s price.
It is likely that retail traders accumulating in the current phase of the market cycle may see opportunities of booking unrealized profits in the following week. Traditionally, Ethereum has led the rally, however, DeFi tokens are offering double-digit returns, and retail and HODLers’ portfolios are more profitable with a mix of DeFi tokens and large-capitalization altcoins.
Bitcoin’s range-bound price action has limited the potential to break upwards past the $63000 level and hit the target set by S2F and S2Fx models. At the same time, investment inflow to altcoins and Bitcoins has dropped, the shortage of supply narrative is building up, however, this is more profitable for retail traders trading altcoins as the variability of profits depends on the volume and not the liquidity on spot exchanges. In the case of Bitcoin, it is the opposite. However, it is likely that an altcoin rally will change the portfolio returns in the next 30 days for traders across exchanges.