After reaching all-time highs, cryptocurrencies Bitcoin and Ether are already showing signs of weakness. However, several segments of the cryptocurrency economy are thriving despite recent concerns. Take Z-Cash, for example, which has increased by nearly 30% since the beginning of November, according to Bloomberg data. The Avalanche token is also holding up well, having gained over 50% in the last seven sessions, while the Crypto.com coin CRO has risen to become the 13th most valuable by market valuation, which has risen to $18 billion.
It’s not uncommon for so-called alternative coins to hold their own against their larger counterparts. This is because many are attached to specific narratives that help them advance. For example, Crypto.com announced last week that it would take over as the title sponsor of a historic Los Angeles sports centre from Staples. According to analysts, this aided the CRO token’s upward movement.
“Right now, the typical alt-coin investor is jumping around looking for the next big move,” said Stephane Ouellette, CEO, and co-founder of crypto platform FRNT Financial Inc.
Meanwhile, the most popular cryptocurrencies have been in a selloff for the past week, with Bitcoin approaching a 20% retracement from its previous high. Ether, the second-largest digital asset by market capitalization, is down 8% from its high on November 10.
Bitcoin was trading about $56,029 as of 3:44 p.m. in New York on Monday. Ether fell by 6.6 percent to nearly $4,079.
“Despite some turmoil, this is still a bull market,” Mati Greenspan, founder, and CEO of Quantum Economics stated. “As a result, money from large-cap currencies can readily find its way into smaller ones.”
Bitcoin and other traditional cryptocurrencies have been selling off for a variety of reasons, including China’s crypto crackdown and new U.S. tax-reporting regulations that are seen as unfavourable to crypto investors, according to strategists.
The larger tokens have grown so much in such a short amount of time that “it’s just been a natural consolidation of the environment, of the price activity,” Thomas Perfumo, Kraken’s head of business operations and strategy, said on Bloomberg’s “QuickTake Stock” streaming show.
According to Bloomberg Intelligence’s Mike McGlone, it seems natural to see certain tokens pause such a rapid rise.
“I see a wall of anxiety, back-and-fill within the bull market for the larger market,” he said. “Shiba Inu became overpriced, which was a bit of a too-hot signal for the overall market, similar to Doge in May.”
Still, according to Kraken’s Perfumo, there are plenty of good drivers for crypto values to rise. He cited, among other things, Jerome Powell’s re-nomination to the Federal Reserve Board of Governors.
“I’m as optimistic on this industry as it gets in the long run,” he remarked.