Although all altcoins are not yet rallying in tandem, some top crypto assets have been outperforming as of late.
Case in point: CoinMarketCap data as of the time of this article’s writing, XRP — the third-largest cryptocurrency by market capitalization — is up 10% in the past 24 hours, outpacing Bitcoin’s relatively mild 0.5% gain.
This rally in some of the leading altcoins is unlikely to continue, with crypto firms observing a clear slowdown in on-chain activity for coins like Cardano, Bitcoin Cash, and Chainlink.
Sorry Bulls: Top Crypto Assets See On-Chain Activity Slow
Over the past few weeks, altcoins across the board have seen impressive rallies as Bitcoin has stagnated in the high-$6,000s and $7,000s.
Among the altcoins that have outperformed include Cardano, Chainlink, and Tezos. While Bitcoin tacked on 15%, the cryptocurrencies mentioned, all multi-billion-dollar assets, have experienced gains of 45% to 65%.
Many of these moves were predicated on fundamental developments pertaining to the projects, but on-chain and market data shows that the chance of a drop is growing.
IntoTheBlock — a blockchain intelligence firm — found that a number of its proprietary signals are “mostly bearish” for some leading crypto assets.
Below is the firm’s dashboard for Cardano as of April 28th.
It indicates that the “Large Transactions” — which tracks multi-million-dollar transactions on the blockchain” — and “Bid-Ask Volume Imbalance” — the skew of a market’s order books — suggest bearish price action is on the horizon, while most of the other signals are mostly trending neutral.
Similar trends have been spotted for Bitcoin Cash and Chainlink, which both registered as “mostly bearish” by IntoTheBlock.
All Altcoins Could Drop, Analyst Fears
It’s important to note that the abovementioned signals only suggest that a short-term altcoin correction is imminent, but some fear that this underperformance could be a longer-term trend for the crypto market as a whole.
An analyst at crypto research firm Blockfyre recently remarked that he intends on reducing his exposure to altcoins because he believes Bitcoin’s block reward reduction will cause volatility that results in altcoins “getting rekt.”
The analyst continued that from how he sees it, altcoins are always a “game of musical chairs” as the reasons they are rallying, Pentoshi explained, are all “red flags,” not fundamental developments:
“The reason the alt pumps are unconvincing is because they have followed the same patterns. IEO’s, Interoperability, privacy coins moving together. It’s coordinated as it has been the last 3 years instead of all ships rising together.”
This skepticism has been echoed by others pointing to how the fundamental narratives in the crypto industry are all focused on Bitcoin — a bellwether for the rest of the industry, especially in such uncertain macroeconomic and geopolitical times.
Photo by nikko macaspac on Unsplash