Even as Bitcoin proceeds on its tear, rallying up to $38,000, some analysts are looking closely at the public demand for ‘altcoins’ or in other words, other cryptocurrencies other then the front-runner, which is the only coin many Americans are familiar with. That means that there are opportunities on the crypto market beyond what would be evident to many small-time investors.
At Coindesk, Omkar Godbole presents charts showing that activity around altcoins like Ethereum and others are likely to ramp up over the next quarter.
Godbole uses a metric called “implied volatility” (among other things) to suggest that market variations are tied to certain kinds of trade volume that would indicate traders are moving toward altcoins.
“The spread between the six-month implied volatility for ether and Bitcoin – a measure of the expected relative price volatility between the two – has risen to a record high of 46%,” Godbole writes. “That surpasses the previous peak of 45% seen on Feb. 21, 2020, according to data provider Skew. The three- and six-month spreads have risen to an 11-month high of 32% and 23%, respectively. The widening of the IV spreads indicates that the market expects ether and other alternative coins to chart bigger percentage moves than Bitcoin in the near term.”
One reasonable assumption is that with the current Bitcoin rally in play, many traders will already have bought the Bitcoin that they intend to hold, and are reaching for additional options to get deeper invested in cryptocurrency as a whole.
In other words, they’re looking for where the value is. Many of them perhaps feel that Bitcoin is overbought and overheated, but cryptocurrency is still an excellent investment as fiat currencies like the dollar experience trouble.
The key here is that while Bitcoin has been seen as a safe haven alternative for equities and gold, other crypto coins represent much of the same value as a safe haven, because they share a lot of the same underlying characteristics. A cryptocurrency like Ethereum, built on decentralized consensus models and carrying the ability to achieve blockchain smart contracts, is every bit as valuable as some other coin in many ways. So if you are pondering a move into crypto, look at all of the choices in front of you to make the best selections.