Cardano (ADA) leads as Altcoins gain momentum, Bitcoin consolidates


9th December 2023 – (New York) In a day marked by capital rotation, native tokens tied to layer 1 (L1) blockchains experienced significant gains, with Cardano (ADA) emerging as the top performer. As bitcoin (BTC) maintained a steady price range, investors redirected their capital towards alternative cryptocurrencies.

Throughout the day, bitcoin fluctuated between $43,000 and $44,000, swiftly recovering from a minor dip triggered by a stronger-than-expected U.S. employment report. The positive economic data dampened expectations of interest rate cuts for the following year. Currently, the leading cryptocurrency is trading around $43,800, consolidating its recent rally from $38,000 to nearly $45,000.

Meanwhile, altcoins witnessed a surge across the board, reminiscent of the “altcoin rotation” observed in early November. This phenomenon occurs when a slowdown in bitcoin momentum prompts traders to realize profits and seek investment opportunities in smaller, riskier cryptocurrencies. Such capital rotations are characteristic of the crypto market, following significant bitcoin price surges, as traders pursue tokens that have yet to experience substantial movement.

Cardano (ADA) stole the spotlight by surging 25% to reach 57 cents at one point, representing its highest price since August 2022. Although it retraced some of its early gains later in the day, ADA remained up by almost 20%. Other notable performers included native tokens of Polkadot (DOT), Algorand (ALGO), Avalanche (AVAX), and Solana (SOL), which registered gains ranging from 7% to 11%.

The CoinDesk Market Index (CMI), a comprehensive basket comprising nearly 200 cryptocurrencies, outperformed BTC by rising 1.5% throughout the day, highlighting the success of altcoins in the current market environment.

Looking ahead, analysts are speculating on potential pullbacks for bitcoin, suggesting a retest of lower price levels. Specifically, Bitcoin-focused analyst Willy Woo identified a price gap between $39,000 and $41,000 in the Chicago Mercantile Exchange (CME) bitcoin futures market. Woo believes that BTC may “fill” this gap at some point in the future. Price gaps occur due to the CME futures market’s limited trading hours, which can result in differences between closing and opening prices. Analysts often anticipate that asset prices will revisit these levels during a correction.

While BTC managed to rally past $40,000 over the weekend when the CME futures market was closed, thus creating the price gap, it is worth noting that not all gaps are filled. For instance, BTC has yet to revisit the CME gap at around $20,000, which formed in March during the weekend collapse of Silicon Valley Bank (SVB).

Despite the possibility of a short-term pullback, the outlook for bitcoin remains bullish. Hany Rashwan, co-founder and CEO of digital asset management firm, emphasized the growing interest among institutional investors. In an interview with CoinDesk TV, Rashwan stated that observers are underappreciating the potential inflows into BTC once a spot-based exchange-traded fund (ETF) is approved in the U.S., an event that analysts believe is likely to happen.

Rashwan highlighted the existence of prospective buyers who have been unable to invest in cryptocurrencies due to regulatory obstacles. He noted that 75% of inflows into digital asset funds during the year occurred within the past 60-90 days, indicating a change in sentiment primarily among institutional players.