For BTC, this has meant consolidation between $39,000 and $42,000. For ETH, this has meant consolidation between $1,100 and $1,250. While some fear that this consolidation is indicative of an impending market top, altcoins have begun to break higher, with BTC and ETH gains cycling into other segments of the cryptocurrency market.
Earlier this week, the altcoins that were rallying were all decentralized finance (DeFi) related. Yesterday and today, the focus has shifted from DeFi to 2017-era altcoins such as IOTA and EOS.
2017-era altcoins erupt higher
The best-performing cryptocurrencies today are almost all altcoins that performed extremely well in the previous bull market in 2016 through early 2018.
ZRX, the native token of the 0x decentralized exchange protocol, is up 25 percent in the past 24 hours, adding to the 40 percent gains it posted earlier this week. The cryptocurrency is likely benefiting from developments around and increased usage of Matcha, a decentralized exchange aggregator built by the 0x team.
It’s worth noting that these coins that are rallying had underperformed DeFi coins, Bitcoin, and Ethereum over the summer and over recent weeks, suggesting this recent price action is just a reversion to mean.
Not all the tokens surging today are 2017-era altcoins, though. Avalanche (AVAX) is up 42 percent in the past day as this new blockchain has begun to roll out applications that may make it a competitor or an alternative to Ethereum.
The ghost chain narrative
Underlying this rally, though, is the fact that many of the coins that are moving higher today have effectively no real-word adoption or even potential utility.
Freddie Farmer, the former head of DeFi at Wintermute Trading and an industry analyst, commented on the matter on Saturday morning:
“The biggest failing of the cycle so far is the fact that ghost chains are still listed and more readily available for normies entering via fiat on-ramps than high-quality blue chips.”
Even today, even after DeFi has seen an influx of capital and users, a large majority of DeFi projects trade outside of the top 50 cryptocurrencies by market capitalization.
Analysts expect the crypto standings to shift over time as investors begin to focus their capital on cryptocurrencies that have a fundamental purpose and/or entitle their holders to future cash flow.