The alternative cryptocurrency (altcoin) market has outperformed major cryptocurrencies such as Ethereum and Bitcoin in recent weeks. However, according to researchers at Santiment, an on-chain market analysis firm, altcoins are “over-bloated.”
Altcoin Rise Draws Attention
When Bitcoin consolidates or sees a small drop over an extended period of time, altcoins tend to rise.
The main companies that invest in Bitcoin and Ethereum often tend to move together during the up and down trends. Therefore, as Bitcoin and Ethereum start to stabilize, small and medium altcoins start to rise.
Over the past week, altcoins such as Augur, Golem, 0x, and OMG have surged between 40% and 120%. The researchers said:
Several mid-range ETH-based crypto assets have been in the limelight today, including GNT (peak at + 95%), REP (+ 56%), and ELF (+ 30%). Meanwhile, Ethereum (-8%) fell. ”
Historical patterns show that at unexpected times, small and medium-sized altcoins sometimes show unfounded rallies.
Altcoins Look Over-Inflated
While it remains uncertain whether the altcoin market is seeing a re-flaring bull cycle or a short-term bull run, the researchers said it was time to be cautious and added:
“These isolated fireworks were exciting for a small handful of traders, but the real story is that the market capitalization of many altcoins shrank drastically on a red day. Altcoins look too swollen, it’s better to be careful. ”
The researchers pointed to various on-chain data points and key factors to suggest that some altcoins seem over-inflated. For example, REP, the native token of Augur, the Ethereum-based prediction platform, increased by 56%. Still, its active addresses remained relatively sluggish, which could roughly indicate the number of users in Augur.
Bitcoin and Ethereum Fundamentals On The Rise
In contrast, both Bitcoin and Ethereum made noticeable improvements in various metrics. Data from blockchain.com shows that the number of unique addresses used in the Bitcoin blockchain has steadily increased in the last 180 days.
Ethereum, whose price has almost doubled in a month since July 20, has seen the number of daily transactions steadily increasing in recent months. Since January, the total daily transactions on the Ethereum Blockchain network have grown from 420,000 to over 1.2 million in August.
Both Bitcoin and Ethereum saw strong spikes supported by clear improvements in key factors and on-chain metrics. There is a possibility that small to medium altcoins will continue to increase and base data will be left behind for a long time. However, in the data on the current chain, it directs the researchers to the cautious side.