Altcoins have benefited as much as Bitcoin from the rise of the crypto market. Digital assets across the space have been able to return to pre-FTX collapse levels, marking the beginning of a bull market. Move and take advantage of possible price fluctuations in smaller altcoins.
Circulating money in small altcoins
A recent report from the on-chain data aggregation website Santiment show Investors may be moving money out of larger cap coins such as Cardano and Solana and into smaller cap coins. It shows the rotation of funds.
Santiment notes that the big gains recorded by Solana, Cardano, Polkadot, etc. are now migrating to smaller altcoins. Most of these coins are tokens below the top 200 with a market cap of less than $300 million.
The circulation of funds into these small altcoins is indicated by address activity. Images shared by Santiment show a significant increase in address activity for these coins. Most notably, we’ve seen an uptick since last week as many of these larger cap coins hit new local peaks.
Money flows out from large cap to small cap altcoins | Source: Santiment
Small cap coins mentioned in the report are TRADE, RBN, SLP, PLSPAD, POND, MITX, MTH, and CBG. Most of these are coins flying under the radar. The most prominent asset on the list, Ribbon Finance (RBN), has a market cap of just $139.7 million, but is up 24% over the past seven days.
What happens to these tokens?
The tokens Santiment mentions are still small enough that we can see noticeable movement in just a fraction of the amount needed to move prices such as SOL and ADA. This means that these tokens could see a positive move in the coming days if the profit rotation from large to small altcoins continues.
However, for a coin with such a low market cap, it is easy to push the price up, but it is just as easy to drive the price down through sales from a few large holders. It’s a double-edged sword for investors following the move. On the one hand, it can mean very large profits in a short period of time, but on the other hand, it can mean losing money rapidly.
The nice thing about this, though, is that it spreads your attention instead of concentrating on just a handful of coins. Increased wallet activity for these altcoins could trigger a search for similarly priced altcoins and benefit from renewed interest.
Crypto market cap crosses $1 trillion as investors move money around | Source: Crypto Total Market Cap on TradingView.com