- Altcoins with market caps under $10 billion are showing signs of upcoming buying opportunities.
- Chainlink (LINK) may be ready for a recovery, evidenced by increased major transaction activity.
The altcoin market has seen a downturn in the past few months so far. After reaching a peak market cap of $1.27 trillion in March, this segment of the crypto market has since fallen by over 8% and is now valued at $1.061 trillion at the time of writing.
This decline is quite noticeable in every aspect of the altcoin market.
According to Jamie Coutts, chief crypto analyst at RealVision, smaller-cap crypto assets have significantly underperformed since Bitcoin [BTC] reached new heights earlier this year
In a detailed analysis shared on social platform
Jamie Coutts suggests that the recent downturn could be a typical mid-cycle correction within the broader cryptocurrency market cycle, which historically opens up buying opportunities.
As the market begins to stabilize, these smaller and mid-cap cryptocurrencies could provide valuable entry points for discerning investors. This perspective is critical as it sheds light on potential recovery paths, pointing to a silver lining after the market storm.
Analytical breakdown: sector performance and forecasts
Jamie Coutts, shares facts from crypto tracking service Bitformance indicates a stark contrast in performance across different crypto sectors.
While the top 200 equalweight index – which gives equal weight to cryptocurrencies regardless of market capitalization – has fallen by more than 30% over the past three months, the market capitalization index saw a smaller decline, showing the resilience of larger cryptocurrencies such as Bitcoin and Ethereum.
Source: Jamie Coutts
Especially Bitcoin and Ethereum [ETH] showed declines of just 11% and 5% respectively, demonstrating their stability compared to the broader market. Among sectors, Metaverse-related tokens and infrastructure projects were hit the hardest, down nearly 44%.
This significant downturn across sectors underlines the vulnerability of specific altcoins in times of market stress, but also highlights the potential for recovery in a stabilizing market.
Coutts’ analysis delves deeper into the specifics of these sectors, providing a clear picture of where the market stands and what lies ahead. He noticed:
“If this is a regular mid-cycle correction that we experience, and which I believe is likely, expect to see some opportunities emerge in the mid and small caps once the market settles down.”
Case study: Chainlink’s market position
To assess whether smaller altcoins, especially those with a market cap of less than $10 billion, are poised for a rally, it is illuminating to examine a specific example from this category.
Chainlink’s LINK token, with a market cap of just over $9 billion, serves as an ideal case study to explore the potential for an uptrend.
Currently, Chainlink is trading at $15.31, reflecting a decline of 1.4% in the past 24 hours and a more substantial decline of 12.4% in the past week.
This downturn was mirrored in the number of active addresses, which has decreased significantly from over 90,000 in March to less than 60,000 today.
Source: Glassnode
This reduction in the number of active addresses typically indicates a lower level of user engagement, which can negatively impact the token’s price stability and growth prospects.
In addition, open interest for LINK, which represents the total number of outstanding derivative contracts that have not yet been settled, has increased remarkable decline of 40% in the last 24 hours.
Source: Coinglass
However, there is a bright spot: a modest increase of 0.52% in the same time frame. This mixed signal from open interest could indicate market uncertainty, but also points to some resilience among investors.
Despite these challenges, there is a glimmer of optimism. The number of large transactions involving LINK, especially transactions above $100,000, has increased significantly, from less than 90 earlier this week to more than 200 on June 12.
Source: IntoTheBlock
Realistic or not, here is LINK’s market cap in BTC terms
This increase, as shown by IntoTheBlock factssuggests that despite the overall market downturn, larger investors, or ‘whales’, are actively accumulating LINK, possibly in anticipation of future price increases.
In addition, AMBCrypto heralded a potentially bullish future for LINK, citing a Relative Strength Index (RSI) of less than 63, which traditionally indicates that a strong bullish trend is developing.