Pantera Capital Foresees Altcoin Surge in Bull Market

In the final third of a cryptocurrency bull market rally, altcoins have historically outpaced Bitcoin in growth, according to experts at Pantera Capital.

With a momentous onset to the year, we believe there is still a ton to look forward to in 2024.

In this month’s letter, we discuss:

— Predictions for 2024
— Crypto correlations within bull cycles
— State of blockchain venture
— The potential of AIxWeb3https://t.co/kq92Qneie3

— Pantera Capital (@PanteraCapital) January 16, 2024

Analyzing two previous market expansion cycles, they found that in the initial phase, the market capitalization share of altcoins decreased, indicating the leading growth of digital gold. However, around 60-70% into the rally, Bitcoin ceded its lead.

Analysts calculated the actual contribution to the overall growth of the total capitalization of Bitcoin and other cryptocurrencies. They estimate that in 2023, the market was in the first phase of the rally. Currently, digital gold has grown 2.8 times, while the rest of the market has increased by 1.7 times.

“Although one of the highest sources of alpha has historically resulted from a timely shift from Bitcoin to altcoins at the start of phase 2, this relationship may not always persist, and the timing of this shift is not an ideal reality for any trader,” the analysts warned.

They explained the superior performance of digital gold in the first stage by several factors. Firstly, it is the most liquid and widely offered asset.

Secondly, newcomers primarily focus on the first cryptocurrency. This is because over 15 years, Bitcoin has largely become a brand for the entire industry.

In the next stage, some investors begin to seek tokens with higher growth potential underlying various use cases. In 2017-2018, these were assets related to ICO, while in 2020-2021, they were linked to DeFi and NFT.

“Our thesis is that altcoins underlying protocols that fit the product market and generate real revenues with strong unit economics will perform best in the upcoming cycle,” the experts emphasized.

In their view, in the long term, the selection of tokens will be of paramount importance for investors, as leading growth can be expected in certain sectors.

Earlier, amid Bitcoin’s price drop to $42,000 following the launch of spot ETFs, altcoins began to show positive dynamics.

According to forecasts by ETC Group’s head of research, Andre Dragos, and QCP Capital specialists, Ethereum will outpace the first cryptocurrency in growth rates in 2024.