A growing short-term conflict in the Bitcoin market has led traders to seek altcoin opportunities.
The Bitcoin Dominance Index, which compares the market capitalization of the largest cryptocurrency against altcoins, fell to its two-month low on Friday. The negative movement of the index appeared when traders pumped the altcoin market up to $ 25 billion. In comparison, Bitcoin attracted about $ 14.77 billion in the same period.
The most recent capital change came when Bitcoin failed to exceed $ 38,000 for the third time in less than a month.
Many traders anticipated a broader price move to $ 40,000, with a primary bullish target lurking in the previous record close to $ 42,000. However, a stronger american dollar and the prospects for a faster U.S. economic recovery have kept demand for safe havens diminished, limiting Bitcoin’s gains.
The price of BTC / USD fell below $ 38,000 and started to form intraday minima close to US $ 36,000. Its flat structure has led traders to look for opportunities elsewhere, which has led to huge short-term bombs across the altcoin market.
The biggest beneficiary was the decentralized financial sector.
Almost all of the major tokens listed under the ‘DeFi’ brand have profited from Bitcoin’s stagnation in the past 24 hours. They included AAVE, a decentralized lending platform, whose token increased by 19 percent, and Maker, a lending platform responsible for creating the stablecoin DAI, whose MKR token increased by 35 percent.
Other DeFi tokens that registered wild rallies include Chainlink’s LINK (+ 11.56%), Synthetix’s SNX (+ 14.60%) and Compound’s COMP (+ 20%).
The data provided by DeFi Pulse showed a peak in the total value blocked between DeFi pools. It reached a record high of $ 33.549 billion on Friday, confirming that more traders have blocked their crypto assets in smart contracts to seek attractive short-term yields.
Most of these liquidity pools allow users to deposit altcoins that operate outside the reach of DeFi. They include Ethereum’s ETH, which has recently reached a historic record after its influx into DeFi pools created a supply crisis on spot exchanges. The token rose 1.67 percent on Friday.
Other traditional altcoins have also recovered, with the controversial Ripple XRP token rising 15 percent and Cardano’s ADA 18 percent.
Higher valuations in the altcoin markets have raised fears about a possible eviction among some analysts. For example, bitcoiner, Vijay Boyapati, warned about the 2018 scenario. At that time, an aggressive bullish run in the cryptocurrency market led to capitalization drops of more than 95%.
“Many altcoins from previous cycles have dropped to zero,” said the author of the ‘Bullish Case for Bitcoin’. “I think the majority in this cycle too. Maybe not everything, but in the long run Bitcoin’s relative market capitalization will mean reverting to something small. It always increases with speculative fervor and dumb money coming in. “
Meanwhile, ShapeShift’s chief executive, Erik Voorhees, said that all cryptocurrencies would be bullish because “the entire industry is growing together and is not mutually exclusive”.