The cryptocurrency market is abuzz with renewed optimism as Bitcoin (BTC) smashed through the $68,000 barrier on Sunday night, reaching a high of $68,486.
This surge comes amidst news of incumbent President Joe Biden's decision to forgo re-election, which he announced through a letter shared on Twitter.
Analysts the announcement is a step towards some political clarity and is fueling investor confidence in the market. But the real story lies with altcoins, which by definition are the top digital assets aside from Bitcoin.
Here, Solana (SOL) has emerged as the frontrunner, experiencing a healthy 4.2% price increase. At the time of writing, SOL is trading for $179.61 according to Coingecko data. That's thanks, at least in part, to political meme coins seeing a wave of trader interest after Biden dropped out of the race over the weekend.
This positive momentum has seemingly spilled over to other altcoins and memes. Solana meme coin Dogwifhat (WIF) has experienced a 10% rise. At the time of writing, WIF is trading for $2.80 after having gained a staggering 57% compared to a week ago.
Joining the party are Avalanche (AVAX) with an impressive 11.3% gain to $32.25 and the ever-popular Dogecoin (DOGE) climbing 5.2% to $0.1379.
The total altcoin market capitalization has now reached $1.34 trillion, according to Coingecko.
But crypto analyst Benjamin Cowen drew parallels between current market conditions and past cycles, highlighting that there’s a chance this altcoin boom could be short-lived.
"BTC dominance monthly candle reminds me of May 2019, which was 2 months before the Fed cut rates last cycle,” the Into the Cryptoverse CEO wrote on Twitter. “BTC also had an explosive move back then too, and ALTs could just not keep up. Similar candle today, potentially 2 months before the 1st rate cut.”
This sentiment is further supported by data from Finery Markets, which reported a significant 51% year-over-year increase in total crypto-to-crypto transaction volumes in the first half of the year.
While Bitcoin and Ethereum (ETH) continue to dominate, several altcoins have shown remarkable growth. Litecoin (LTC) experienced an 80% YoY increase, Tron ( TRX) surged by 202%, and Binance Coin ( BNB) grew by 129%.
Interestingly, a research note from Finery Markets research attributes much of this growth to a low base effect resulting from the market downturn in the first half of 2023, which was triggered by the collapse of FTX.
This suggests that the current altcoin surge, led by Solana, may be part of a broader market recovery and maturation process.
However, it's worth noting that institutional participation in altcoins remains relatively low, with the top five alternative cryptocurrencies accounting for just 5.4% of total trading volume.
This indicates that there may still be significant room for growth as institutional investors become more comfortable with these assets.
Providing a bullish outlook for the crypto industry in the second half of the year, Mads Eberhardt, Senior Cryptocurrency Analyst at Steno Research said on Twitter there has been a massive increase in USD liquidity, thanks to what’s like to be the first interest cut by the U.S. FED and both Bitcoin and Ethereum having U.S. spot ETFs, and Bitcoin ETFs having seen a record-breaking launch at the start of the year.
Eberhardt also highlighted other positive factors, including "clear regulatory framework with the European Union's MiCA, steadily declining exchange balances, strong seasonal trends, a period post-fourth Bitcoin halving, a time when Bitcoin has always thrived."
He further noted that "every major bank will experiment with on-chain Real-World Assets" and "in November, the very first U.S. pro-crypto President is likely to be elected."
Based on these factors, Eberhardt issued a bullish forecast for "Bitcoin at $100,000. Ethereum at $6,500."
Edited by Stacy Elliott.