Welcome to the third part of our series of articles designed to help you understand the flow of money through cryptocurrency investing. We examine the historical trends that appear to be driving a predictable sequence of investor behavior after a rally in Bitcoin prices. In Part 1 of this series, we examine why Bitcoin tends to be a first mover, its power to attract new crypto investors into the fold, and how this triggered the cash flow we discuss in this series of articles. The second part examined why Ethereum tends to be the next to move. We explain that this is primarily due to its size (Ethereum is the second largest crypto asset by market capitalization) and the fact that it supports an ecosystem of apps and services. This week we take a look at the next phase, which plays out a bit differently than before. Where historically we have seen money flowing from Ethereum to large-cap altcoins, this time they seem to move all at once. But before we delve into the details, let's first understand what a large-cap altcoin is.
“Large-Cap Altcoins”… what do you say now?
Let's examine it. "Large cap" describes a crypto asset with a huge "market capitalization", often abbreviated as market capitalization. A market capitalization is simply the total value of a crypto asset. For example, at the time of writing this article, Bitcoin's market capitalization is $XNUMX trillion. In other words, the total value of each and every bitcoin in circulation is one with one trillion US dollars. What is an "altcoin"? With Bitcoin, the original cryptocurrency, still holding the top spot in terms of market capitalization, almost all other crypto assets are generally considered an alternative option to Bitcoin. Hence the term "altcoin". Consequently, large-cap altcoins are essentially any crypto asset with a huge market capitalization other than Bitcoin. Now that we understand what large-cap altcoins are, let's take a look at how standard cash flow got its start and why it might be a little different this time around. It all started with standard cash flow Following the market reversal at the end of September, we saw the cost of Bitcoin simply outperform altcoins, posting a staggering +XNUMX% return to all-time highs. Meanwhile, Ethereum (+XNUMX%), Solana (+XNUMX%), Cardano (-XNUMX%) and many more struggled to keep up with the old guard. As we have learned in previous parts of this series, the “standard money flow” suggests that money will flow from Bitcoin to Ethereum and then power large-cap altcoins. But what if it was wrong? The standard cash flow cycle is not so standard anymore. Recent cost data really shows that money isn't just flowing into Ethereum. This time, large-cap altcoins are moving as well as Ethereum. This is an essential historical money flow change that so many investors have been following for years, and the answer to why this change is partly easy.The battle for the altcoin throne
Previously, flowing from Bitcoin to Ethereum was a safe thing, like getting headphones with your new Apple iPhone. And just like you, Ethereum is realizing that there is less and less in its box. There are many factors behind this phenomenon, but chief among them is the fact that the large-cap altcoin industry now offers investors a much broader range of ambitious and potentially disruptive technologies to choose from. In the past, Ethereum might have reasonably been seen as the only viable prospect for a decentralized future based on smart contracts, but those days are long gone. In smart contracts, for example, Solana, Cardano, and Polkadot have become major players, to name a few. With the new wave of 'Ethereum killers' popping up left, right and center, we see many investors choosing to spread their investment across multiple Ethereum competitors, and as a result, the standard flow to Ethereum is fairly spread across several large-cap altcoins. , which show exactly the same promise.
