The altcoin market, particularly cryptocurrencies with market capitalizations under $10 billion, may be poised for a rebound. These digital assets have experienced a significant decline since Bitcoin reached a new high earlier in 2024.
According to Jamie Coutts, RealVision’s chief crypto analyst, “Smaller cap crypto assets have been taking it on the chin since March high of this year,” he shared in a June 13 post on X. This downturn followed Bitcoin’s all-time high of $73,679 on March 13. However, over the past week, Bitcoin has decreased nearly 6% to $67,126, as reported by Cointelegraph Markets Pro.
Potential Mid-Cycle Correction
Coutts suggests that the market may be undergoing a regular mid-cycle correction. He believes this presents potential opportunities for investors in mid and small-cap cryptocurrencies once the market stabilizes.
The equal weight balance index, which assigns equal weight to all cryptocurrencies regardless of market cap, fell 33% against the market cap index. This decline indicates weaker performance among smaller cryptocurrencies compared to larger ones dominating the market cap index.
Performance Analysis
Crypto tracking data from Bitformance highlights that over the past three months, the top 200 equal weight index dropped over 30% against the market cap index. This demonstrates that smaller cryptocurrencies underperformed compared to their larger counterparts.
During this period, Bitcoin and Ether saw respective declines of 11% and 5%. Additionally, metaverse-related tokens recorded the lowest returns within the index, with a negative 44.13% return. In the market cap category under $1 billion, metaverse tokens like The Sandbox and Decentraland declined by over 15% in the past week.
Also Read: Only Six Altcoins Outperform BTC in 2024
Growing Institutional Interest
Despite these declines, institutional interest in cryptocurrencies beyond Bitcoin and Ether continues to grow. On June 6, Franklin Templeton announced its exploration of a new crypto fund aimed at institutional investors. While the asset manager did not specify which altcoins would be included in the fund, it recently praised the Solana network.
The current downturn in smaller cap cryptocurrencies might present buying opportunities for investors. As the market potentially undergoes a mid-cycle correction, these assets could offer significant value once the market stabilizes. Institutional interest, particularly from firms like Franklin Templeton, further underscores the growing appeal of altcoins.
