Altcoins could face a “mania phase” soon: Bitfinex

Altcoins have demonstrated notable composure in the face of Bitcoin’s recent volatility, as highlighted in the latest “Bitfinex Alpha” report. The Total3 index, which excludes Bitcoin and Ethereum to measure the rest of the crypto market, reached a new cycle high with a market capitalization of $788 billion on Mar. 14.

The new cycle high of the Total3 Index represents an over 74% increase from its peak during the bear market, signaling robust growth in altcoin investments. This trend highlights a diversifying crypto landscape where altcoins are not just gaining traction but also attracting significant capital inflows. The index is now a mere 6.5% shy of its April 2022 high of $837.5 billion. Surpassing this threshold could usher altcoins into a “mania phase,” characterized by heightened investor enthusiasm and substantial gains across the sector.

Total3 Index variation. Image: Bitfinex

While Ethereum’s Total Value Locked (TVL) remains a key indicator of capital inflows into Ethereum Virtual Machine (EVM) compatible chains and projects, the performance of other Layer-1 blockchains has begun to dilute Ethereum’s historical role as a bellwether for altcoins. Nevertheless, Ethereum’s influence in predicting altcoin market movements is still considerable.

Despite this evolving landscape, Ethereum’s performance against Bitcoin has been lackluster. The Dencun upgrade has not provided a strong narrative to significantly boost its price, even as other altcoins fare well. The ETH/BTC ratio is approaching its bear market low, a level that was tested earlier in the year before the exchange-traded fund (ETF) launch.

However, there is a silver lining: Ethereum-based altcoin projects are performing robustly, and on-chain metrics suggest a bullish outlook for the ecosystem. Notably, the largest Ether netflow from exchanges in 2024 was recorded last week at 154,000 Ether leaving the centralized trading platforms, indicating a potential short-term upward price trajectory. This movement could be attributed to traders shifting their Ether off exchanges to trade on ERC-20 protocols or Layer-2 platforms like the Base mainnet, which has seen its TVL double in the past two weeks.

The increasing adoption of major Layer-1 blockchains as the base currency for on-chain trading activities is a bullish sign for Ethereum and its peers. This trend not only boosts their utility and demand but also contributes to their resilience during Bitcoin downturns.

Moreover, the weekly performance of large-cap altcoins shows that Layer-1 ecosystems like Tron, Near, Solana, Avalanche, Aptos, and Binance Chain are outperforming the general market. Near, in particular, has garnered significant investor attention ahead of NVIDIA’s Transforming AI conference, where Near Protocol’s co-founder and CEO Illia Polosukhin is set to speak.

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