The bitcoin dominance index fell to 48% in April, according to the report of the Finance cryptocurrency exchange, which Investee got acquainted with. At the same time, according to experts, the total capitalization of digital assets increased to $ 2.4 trillion, which is 27% higher than in March. Ethereum showed significant growth over the past month and a half, the capitalization of which exceeded $ 450 billion, and the price per coin reached $ 4,000. Experts expect the trend for investments in altcoins to continue. The main reasons for this are the active development of projects on the Ethereum and Binnacle coin blockchain, a higher growth potential for altcoins than Bitcoin, with less investment, and an increased demand for Ethereum before upgrading its network.
On new coins
The total market value of 9192 cryptocurrencies, according to the resource CoinMarketCap, reached $ 2.2 trillion at the end of April, which is 16.7% more than in March. At the same time, the Bitcoin Dominance Index fell below 48%, the smallest value since July 2018, Finance Futures reported in its April 2021 trading report. At the same time, on May 11, the last figure dropped to 42.6%, and on May 7 it dropped to 40.28%, said Gelb Kotare, director of Finance in Russia and the CIS. The capitalization of digital assets in general, solely thanks to altcoins, has so far increased to $ 2.4 trillion, added Janis Kikois, a leading strategist at the investment company Exanthem.
At the same time, the price of Ethereum, the leader in smart contracts and projects based on its blockchain, showed a sharp increase in April – by more than 44%. The token’s annual return has exceeded 320%, and its market capitalization was $ 350 billion in early May, as seen in the Finance Futures document. Now, according to the website Investing.com, the market capitalization of Ethereum already exceeds $ 450 billion. Over the past 30 days, its rate has grown by 93%, to $ 4.1 thousand. The main reason is the increased activity in its network. According to analytics provider Lassonde, the amount of Ethereum locked in smart contracts has nearly doubled since last year. With the growth of this indicator, the volume of supply of cryptocurrency on exchanges continues to decline. In early May, it was at 13.5 million coins, which indicates significant demand for them, explained in the Finance Futures report.
The main reason for the bullish sentiment of investors on Ethereum is the upcoming update of its network, which is due to occur on July 14. However, as a result, the total supply of cryptocurrency will also decrease, which can lead to an excess of demand over supply.
Altcoin market capitalization has grown from less than $ 250 billion to $ 1.1 trillion since the beginning of the year, according to CoinMarketCap. At the same time, most of these tokens rose in price along with bitcoin, but several coins surpassed it and stood out in particular. Ethereum, Finance Coin and Cardanol have done the most damage to the dominance of the main cryptocurrency, Finance Futures reported.
Finance Coin continues to set records, increasing 105% in April. The latest wave of token growth was fueled by the increased popularity of the Finance Smart Chain ecosystem and active investments in projects on the cryptocurrency blockchain.
The capitalization of cryptocurrencies will continue to grow due to the high interest of investors in the market and due to the continuing inflation of the dollar, Vladimir Smetana, CEO of the Swiss financial company Newsnet, is sure. At the same time, individual currencies, such as Ethereum, may continue to rise in price until the end of the year and even beyond. In contrast to 2013–2017, this time the bubble may not collapse, but a smooth exit to a temporary decline in the rate. At the same time, the bitcoin dominance index is able to break the previous record of a minimum of 32%. However, a decrease in the indicator to values less than 30% may lead to serious unrest in the market.
The decline in the dominance index of the main cryptocurrency is taking place against the background of the growth of altcoins with medium and small caps. It is in them that retail investors are now interested, while institutional investors continue to invest in more stable coins such as bitcoin and ether, said Gelb Kotare, director of Finance in Russia and the CIS. Altcoins are preferred by retail investors due to the potential for multiple profits despite the high risks of depreciation of these coins.
First, it has risen in price significantly, large investors who wanted to invest in it have already done so a year ago, and now, if there is no further growth in the token rate, they can start selling it, says Leonid Delisting, an analyst at Fanam Group. And secondly, Ethereum has a growing community of developers who are creating new use cases based on its blockchain, which increases the possibilities for its future use.
Altcoins are preferred by investors as they have much more upside potential for less investment. The expert predicts the continuation of this trend until the end of summer.
In the short term, market participants are likely to focus on Ethereum, the value of which in the short term can reach $ 5 thousand. And when investors feel the price limit of the token, they will start investing in other altcoins: Ripple, Stellar, Unsnap, Siliqua. Now, Ethereum attracts a low price compared to Bitcoin, with a high level of trust and growth potential. The cryptocurrency can repeat the dynamics of bitcoin in 2017 with a maximum of around $ 10,000 within a year, the expert said.