Coinbase Predicts Major Altcoin Rally Post-Inauguration: Traders Position for Outsized Gains

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  • Coinbase analysts and a crypto VC expect an altcoin rally after the inauguration
  • Analysts cited weakening BTC dominance and capital inflows to altcoins

Experts predict that the cryptocurrency market may be preparing for a significant surge in altcoins following Donald Trump’s inauguration on Monday. In reality, analysts at Coinbase pointed out that the recent increase in altcoins was due to a minor decrease in Bitcoin‘s [BTC] dominance earlier in the week.

Moreover, the experts pointed out that traders are preparing for a potential surge in altcoins due to the new government. This was one of the key points made in their latest market analysis.

During the inflation relief rally on January 15, the decline in Bitcoin’s dominance from 58.5% to 57.3% indicates to us that traders could potentially be preparing for a significant increase in the altcoin market, possibly due to favorable conditions for risk assets and cryptocurrencies.

Bitcoin dominance retreats

Chris Burniske, a partner at the cryptocurrency venture capital firm Placeholder and previously the lead for crypto at ARK Invest, shared a comparable viewpoint, emphasizing Bitcoin’s predominant role. In simpler terms, he suggested that Bitcoin has a significant influence or control in the crypto market.

It’s worth noting that Bitcoin’s dominance in the market has been gradually decreasing since November ’24. If this trend persists, it could lead to some exciting developments for lesser-known cryptocurrencies.

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As per the analysis by David Duong and David Han from Coinbase, increased inflow of stablecoins could potentially indicate an upcoming surge in the value of alternative cryptocurrencies (altcoins).

It was observed that there were significant investments coming into the sector, with a large share of it being directed towards alternative cryptocurrencies (altcoins). Meanwhile, Bitcoin (BTC) and Ethereum (ETH) experienced a decrease in investment.

Last week, the supply of stablecoins grew by approximately $1.3 billion, a pattern that has been ongoing for the past two months according to our perspective. This increase contrasts with net withdrawals totaling $457 million from Bitcoin and Ethereum ETFs in the U.S. spot market, as well as withdrawals of $206 million from Ethereum ETFs specifically. In simpler terms, we’ve seen a rise in stablecoin holdings which could indicate capital moving towards less mainstream assets, while there have been outflows (withdrawals) from Bitcoin and Ethereum ETFs in the U.S. market over the same period.

Even though there appears to be a positive trend in the market (bullish outlook), the Ethereum-to-Bitcoin ratio (ETH/BTC) didn’t conform at the point of this analysis. This ratio measures how ETH performs compared to BTC, and during November’s strong altcoin period, it too experienced a surge.

Indeed, the ratio had just reached an all-time low of 0.31 at the present moment. Given its role as a gauge within the altcoin market, this suggests a potentially unfavorable outlook for the predicted altcoin surge, particularly if the trends seen in November are mirrored.

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Speaking of which, it’s worth noting that alternative coins such as Fartcoin and XRP emerged victorious in the weekly race, boasting approximately 100% and 30% increases respectively. Solana [SOL] followed closely with a 30% surge, while Hedera saw a 22% increase.

It’s additionally important to point out that both Hedera and XRP were among the leading altcoins during the surge in November as well. Time will tell if they can maintain this pace moving forward.

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2025-01-19 07:03