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Home Altcoins

Is now the time to invest in altcoins? Chainlink analysis shows…

June 14, 2024
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Is now the time to invest in altcoins? Chainlink analysis shows…
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  • Altcoins with market caps under $10 billion show signs of upcoming buying opportunities.
  • Chainlink (LINK) may be poised for recovery, indicated by increased large transaction activity.

The altcoin market has experienced a downturn so far, in the past months. After reaching a peak market capitalization of $1.27 trillion in March, this segment of the crypto market has since declined by over 8%, now valued at $1.061 trillion as of this writing.

This decline has been quite noticeable in every aspect of the altcoin market.

According to RealVision chief crypto analyst Jamie Coutts, smaller cap crypto assets have significantly underperformed since Bitcoin [BTC]  reached new heights earlier this year

In a detailed analysis shared on the social platform X, Coutts remarked that these altcoins have faced considerable challenges since a peak in March, mirroring a broader sentiment of cautious investor behavior in riskier assets.

Jamie Coutts suggests that the recent downturn could be a typical mid-cycle correction within the broader cryptocurrency market cycle, which historically opens up buying opportunities. 

As the market begins to stabilize, these smaller and mid-cap cryptocurrencies could present valuable entry points for discerning investors. This perspective is vital as it sheds light on potential recovery trajectories, suggesting a silver lining after the market storm.

Analytical breakdown: Sector performance and predictions

Jamie Coutts, sharing data from the crypto tracking service Bitformance indicates a stark contrast in performance across various crypto sectors.

Over the past three months, while the top 200 equal weight index — which assigns equal weight to cryptocurrencies irrespective of market cap — has declined by over 30%, the market cap index saw a lesser fall, highlighting the resilience of larger cryptocurrencies like Bitcoin and Ethereum. 

Source: Jamie Coutts

Particularly, Bitcoin and Ethereum [ETH] showed declines of only 11% and 5%, respectively, showcasing their stability compared to the broader market. Among the sectors, Metaverse-related tokens and infrastructure projects were hit hardest, with declines nearing 44%. 

This significant downturn across various sectors underscores the vulnerability of specific altcoins in times of market stress but also highlights the potential for recovery in a stabilizing market. 

Coutts’s analysis further delves into the specifics of these sectors, providing a clear picture of where the market stands and what might lie ahead. He noted:

“If this is a regular mid-cycle correction we are experiencing, which I believe is likely, then expect some opportunities to be had in the mid & small caps once the market settles.”

Case Study: Chainlink’s market position

To assess whether smaller altcoins, particularly those with market capitalizations below $10 billion, are primed for a rally, it’s insightful to examine a specific example from this category.

See also  What of Bitcoin's fortunes after GBTC outflows drop for 1st time?

 Chainlink’s LINK token, with a market cap just over $9 billion, serves as an ideal case study to explore the potential for an upward trend.

Currently, Chainlink trades at $15.31, reflecting a 1.4% decrease in the last 24 hours and a more substantial 12.4% drop over the past week.

This downturn was mirrored in its number of active addresses, which have decreased significantly from over 90,000 in March to below 60,000 today. 

Source: Glassnode

This reduction in active addresses typically indicates a lower level of user engagement, which can adversely affect the token’s price stability and growth prospects.

Additionally, the open interest for LINK, which represents the total number of outstanding derivative contracts that have not been settled, has seen a notable decrease of 40% within the past 24 hours. 

Source: Coinglass

However, there’s a silver lining with a modest increase of 0.52% in the same timeframe. This mixed signal in open interest might suggest market uncertainty but also indicates some resilience among investors.

Despite these challenges, there is a glimmer of optimism. The number of large transactions involving LINK, specifically those exceeding $100,000, has risen significantly—from below 90 earlier in the week to over 200 on June 12. 

Source: IntoTheBlock


Realistic or not, here’s LINK market cap in BTC’s terms


This surge, as shown by IntoTheBlock data, suggests that despite the overall market downturn, larger investors, or ‘whales,’ are actively accumulating LINK, potentially in anticipation of future price increases.

Furthermore, AMBCrypto has signaled a potentially bullish future for LINK, citing a Relative Strength Index (RSI) reading below 63, which traditionally indicates a strong bullish trend is forming.

 

Next: Polkadot: Can Web3 gaming be the catalyst for DOT’s recovery?

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  • Altcoins with market caps under $10 billion show signs of upcoming buying opportunities.
  • Chainlink (LINK) may be poised for recovery, indicated by increased large transaction activity.

The altcoin market has experienced a downturn so far, in the past months. After reaching a peak market capitalization of $1.27 trillion in March, this segment of the crypto market has since declined by over 8%, now valued at $1.061 trillion as of this writing.

See also  PEPE falls 26% in 4 days: Is it time for holders to leave the market?

This decline has been quite noticeable in every aspect of the altcoin market.

According to RealVision chief crypto analyst Jamie Coutts, smaller cap crypto assets have significantly underperformed since Bitcoin [BTC]  reached new heights earlier this year

In a detailed analysis shared on the social platform X, Coutts remarked that these altcoins have faced considerable challenges since a peak in March, mirroring a broader sentiment of cautious investor behavior in riskier assets.

Jamie Coutts suggests that the recent downturn could be a typical mid-cycle correction within the broader cryptocurrency market cycle, which historically opens up buying opportunities. 

As the market begins to stabilize, these smaller and mid-cap cryptocurrencies could present valuable entry points for discerning investors. This perspective is vital as it sheds light on potential recovery trajectories, suggesting a silver lining after the market storm.

Analytical breakdown: Sector performance and predictions

Jamie Coutts, sharing data from the crypto tracking service Bitformance indicates a stark contrast in performance across various crypto sectors.

Over the past three months, while the top 200 equal weight index — which assigns equal weight to cryptocurrencies irrespective of market cap — has declined by over 30%, the market cap index saw a lesser fall, highlighting the resilience of larger cryptocurrencies like Bitcoin and Ethereum. 

Source: Jamie Coutts

Particularly, Bitcoin and Ethereum [ETH] showed declines of only 11% and 5%, respectively, showcasing their stability compared to the broader market. Among the sectors, Metaverse-related tokens and infrastructure projects were hit hardest, with declines nearing 44%. 

This significant downturn across various sectors underscores the vulnerability of specific altcoins in times of market stress but also highlights the potential for recovery in a stabilizing market. 

See also  North America Photo Editing Software Market Major Manufacturers, Trends, Demand, Share Analysis to 2027

Coutts’s analysis further delves into the specifics of these sectors, providing a clear picture of where the market stands and what might lie ahead. He noted:

“If this is a regular mid-cycle correction we are experiencing, which I believe is likely, then expect some opportunities to be had in the mid & small caps once the market settles.”

Case Study: Chainlink’s market position

To assess whether smaller altcoins, particularly those with market capitalizations below $10 billion, are primed for a rally, it’s insightful to examine a specific example from this category.

 Chainlink’s LINK token, with a market cap just over $9 billion, serves as an ideal case study to explore the potential for an upward trend.

Currently, Chainlink trades at $15.31, reflecting a 1.4% decrease in the last 24 hours and a more substantial 12.4% drop over the past week.

This downturn was mirrored in its number of active addresses, which have decreased significantly from over 90,000 in March to below 60,000 today. 

Source: Glassnode

This reduction in active addresses typically indicates a lower level of user engagement, which can adversely affect the token’s price stability and growth prospects.

Additionally, the open interest for LINK, which represents the total number of outstanding derivative contracts that have not been settled, has seen a notable decrease of 40% within the past 24 hours. 

Source: Coinglass

However, there’s a silver lining with a modest increase of 0.52% in the same timeframe. This mixed signal in open interest might suggest market uncertainty but also indicates some resilience among investors.

Despite these challenges, there is a glimmer of optimism. The number of large transactions involving LINK, specifically those exceeding $100,000, has risen significantly—from below 90 earlier in the week to over 200 on June 12. 

Source: IntoTheBlock


Realistic or not, here’s LINK market cap in BTC’s terms


This surge, as shown by IntoTheBlock data, suggests that despite the overall market downturn, larger investors, or ‘whales,’ are actively accumulating LINK, potentially in anticipation of future price increases.

Furthermore, AMBCrypto has signaled a potentially bullish future for LINK, citing a Relative Strength Index (RSI) reading below 63, which traditionally indicates a strong bullish trend is forming.

 

Next: Polkadot: Can Web3 gaming be the catalyst for DOT’s recovery?
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Enjin and George Murphy expand musical reach through NFTs and RWAs

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