Uncertainty Resolved, Bitcoin Reached a Record, Are Altcoins Next?

Last week, we evaluated that markets do not like uncertainty and that a more predictable environment with the election will also affect the markets. With the election of crypto-friendly President Trump, Bitcoin, which was around 70 thousand dollars, gained nearly 15% in value during the week and is hovering around 80 thousand dollars, breaking new records.

With the increase in the number of crypto-positive seats in both the House of Representatives and the Senate in America, attitudes and regulations on cryptocurrencies will progress positively in the coming period. When the 25 basis point interest rate cut by the FED, in line with expectations, signaled that there would be no change in the loosening monetary policies, cryptocurrencies took the wind behind them. While many cryptocurrencies increased by double-digit percentages throughout the week, Bitcoin’s market dominance also decreased, giving altcoin investors hope.

Let’s briefly touch on the ETF front, emphasizing that ETFs also accompany the wind, but that this wind is not limited to ETFs. On Thursday of a very high-volume week, Bitcoin spot ETFs broke a record with a net inflow of approximately $1.4 billion. It is important to underline that approximately $1.1 billion of the inflow came from BlackRock, and there was a volume of $4 billion in the BlackRock ETF on the trading day.

This demand for Bitcoin; It enabled the world’s largest asset manager to surpass a new milestone in its product. The assets under management of the spot Bitcoin ETF that BlackRock launched earlier this year (January 2024) have reached over $33 billion, surpassing the gold ETF it launched almost 20 years ago (January 2005).

Since the beginning of the year; We evaluate that investments in spot Bitcoin ETFs make a positive contribution to the value of Bitcoin, but since these products are a part of traditional finance, they are open for trading on weekdays and during working hours. In this case, one of the key questions is: “What are the volume and price movements outside these hours?” At this point, the continuation of positive signals becomes one of the critical indicators to ensure the continuity of value increase. In particular, it is important that positive price movements continue in cryptocurrency markets even when traditional finance is closed. That’s why it is emphasized that wind is not limited to ETFs only.

In order to evaluate the real value of an investment more accurately, I think that looking at whether the BTC parity is rising or not will evaluate this movement more objectively. As a result, while the main cryptocurrency is gaining value, it is normal for others to experience a parallel increase in value. Sort of like calculating nominal value and real value. Let’s proceed through Ethereum and Solana.

In the last article; We mentioned that the election of a president who has an NFT collection on Ethereum and whose children have projects in decentralized finance on Ethereum would be a significant development. The ETH/BTC parity, which was 0.035 as of election day, is around 0.04 as of writing, meaning Ethereum has gained nearly 15% in value against Bitcoin this week. Similarly, on the Solana side, there is a gain of over 10% against Bitcoin.

While Bitcoin spends every day searching for new records, Ethereum is still down 35% from its peak of $3200 to $4900. Solana, on the other hand, is approximately 20% down from its peak of $ 260, but with the effect of the token inflation released in the period from 2021 to now, it is breaking new records with a market value of close to $ 100 billion. Ethereum, on the other hand, is currently 30% behind its market value of $ 560 billion in 2021. Solana has outperformed Ethereum, but both still have a ways to go. The existence of spot ETFs on the Ethereum side is an extra plus, but it is also a fact that the expected investments have not arrived so far. If the wind starts blowing there, the story will change.

It is essential for the expected altcoin rally to occur in the coming period that blockchains (layer-1), which host many blockchain projects and memecoins, with Ethereum and Solana being the pioneers, continue to increase in value against Bitcoin (Bitcoin market dominance decreases). It is a fact that positive signals came in this regard last week, but it is still early to say that the wind is also blowing on altcoins.

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