Industry players say altcoins may have more upside than Bitcoin after President-elect Donald Trump, this time known as a crypto supporter, returns to the Oval Office.
The term “altcoin” generally refers to cryptocurrencies with a smaller market capitalization than Bitcoin. Samir Kerbage, chief investment officer at Hashdex, pointed out that they may benefit more from a digital asset-friendly regulatory environment.
Cryptocurrency bulls are hoping the new administration will roll out more digital-asset-friendly policies as Trump, who is set to be inaugurated at noon on Monday, received support from several key figures in the digital asset space during his campaign and said he would nominate the former president. Paul Atkins, a member of the U.S. Securities and Exchange Commission who is considered pro-cryptocurrency, will serve as chairman of the securities regulator.
“Bitcoin has always had this regulatory certainty, altcoins have never had this regulatory certainty,” Katherine Kirkpatrick Bos, general counsel at crypto infrastructure company StarkWare, said in a phone interview. sex."
Gary Gensler, the current chairman of the U.S. Securities and Exchange Commission who will step down on Monday, said Bitcoin is the only cryptocurrency he has labeled as a commodity rather than a security. Meanwhile, the SEC has classified several other cryptocurrencies as securities, including XRP XRPUSD, Algorand ALGOUSD, Polygon MATICUSD, Axie Infinity AXSUSD, and Filecoin FILUSD, in lawsuits against multiple digital asset companies.
Securities are primarily regulated by the SEC, while the CFTC regulates commodities. Commodities are generally subject to less stringent rules than securities.
Kerbage said regulatory uncertainty around some crypto-assets has deterred some institutional investors from investing in them. Kerbage added that if cryptocurrencies other than Bitcoin were more clearly classified, investors might be more willing to allocate funds to them, potentially pushing their prices higher.
Still, investors need to exercise caution when considering investing in altcoins, which vary in their potential use cases, utility and credibility, StarkWare’s Bos noted. "Some may just be scams," Boss said.
It’s unclear how far Trump, who during his first White House term went so far as to call Bitcoin a scam, will follow through on his promises to the cryptocurrency industry and what a new regulatory regime would look like.
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Additionally, Powell noted that while most cryptocurrencies are highly volatile, altcoins tend to be more volatile than Bitcoin, and they also face more limited liquidity than Bitcoin.
Sidney Powell, CEO and co-founder of decentralized lending platform Maple Finance, said another possible catalyst that crypto market participants are hoping for is a rise in the Trump administration’s Exchange-traded funds approved for investing in altcoins.
So far, regulators have only approved Bitcoin and Ethereum ETFs in the United States. Several asset managers, including Grayscale, Bitwise, VanEck, Canary Capital and 21Shares, have submitted applications for the Solana SOLUSD and XRP XRPUSD ETFs.
While Bitcoin could also benefit from potential pro-cryptocurrency policies in the U.S., especially if Trump follows through on his promise to build a strategic reserve of Bitcoin, “it will take more buying activity to drive Bitcoin’s growth, while altcoins have The market capitalization is much lower now," Powell added.
Crypto trading analysts say that to confirm the so-called altcoin season, a period in which altcoins continue to outperform Bitcoin, Bitcoin’s dominance must fall below the 57.3% support level as the largest cryptocurrency hovers around 100,000 dollar milestone nearby. QCP Capital Corporation. Bitcoin’s dominance, which measures its market capitalization as a proportion of the total cryptocurrency market capitalization, was around 57.6% on Friday afternoon.
Bitcoin was trading at about $104,337 on Friday night, about 3% below its all-time high of $108,309 set on Dec. 17.
Meanwhile, the so-called Altcoin Seasonal Index, published by BlockchainCenter and measuring whether altcoins have outperformed Bitcoin over a 90-day period, was at 55 on Friday afternoon. Analysts at BlockchainCenter noted that if the index remains above 75 for the long term, it will signal the arrival of altcoin season.