When BTC rises which crypto rises by a bigger increase in percentage?

Answered at Sep 20, 2024

When BTC Rises, Which Crypto Rises by a Bigger Increase in Percentage?

Introduction

When Bitcoin (BTC) experiences a surge in price, it often leads to a ripple effect across the cryptocurrency market. This phenomenon, known as an "alt season," can result in significant price increases for various altcoins, sometimes outpacing Bitcoin's gains. This report examines which cryptocurrencies tend to rise by a larger percentage compared to Bitcoin during bull runs, based on historical data and market trends.

Altcoin Performance During Bitcoin Bull Runs

2017 Bull Run

During the 2017 bull run, Bitcoin's price increased from approximately $1,000 to $19,500, representing a gain of about 1,850% (Forbes, 2024). However, several altcoins outperformed Bitcoin during this period:

  1. Ethereum (ETH): Experienced substantial growth, with gains significantly higher than Bitcoin.
  2. Cardano (ADA) and Polkadot (DOT): These all-in-one blockchain platforms saw considerable price increases.

2020-2021 Bull Run

The 2020-2021 bull run saw Bitcoin rise from around $3,600 to its all-time high of approximately $69,000, a gain of about 1,817% (Coinmetro, n.d.). During this period, several altcoins outperformed Bitcoin:

  1. Decentralized Finance (DeFi) tokens: Uniswap, Compound, and Aave rose by an average of almost 600% from August 2020 to May 2021, while Bitcoin increased by nearly 470% in the same timeframe (Forbes, 2024).
  2. Non-Fungible Tokens (NFTs): Tokens associated with NFT platforms saw significant gains.

Recent Trends (2024)

In the current market cycle, several altcoins have shown strong performance relative to Bitcoin:

  1. Solana (SOL): Up nearly 100% in the last three months.
  2. Ethereum (ETH): Gained 60% in the same period.
  3. Immutable X (IMX): Increased by 118% since late December.
  4. Avalanche (AVAX): Rose 63% in the last three months.
  5. Celestia (TIA): Up 70% in the last three months.
  6. Thorchain: Trading nearly 50% higher than one month ago.

(Forbes, 2024)

Factors Influencing Altcoin Performance

Several factors contribute to certain altcoins outperforming Bitcoin during bull runs:

  1. Market Capitalization: Smaller-cap altcoins have more room for growth, potentially leading to higher percentage gains.

  2. Technological Advancements: Coins with innovative features or solving specific problems may attract more investor interest.

  3. Network Effects: As more users adopt a particular blockchain or protocol, its associated token may experience increased demand.

  4. Sector-Specific Growth: Altcoins in rapidly growing sectors (e.g., DeFi, NFTs, Layer-2 solutions) may see outsized gains.

  5. Speculation and Risk Appetite: During bull markets, investors often seek higher-risk, higher-reward opportunities in smaller altcoins.

Bitcoin Dominance and Alt Seasons

Bitcoin dominance, which measures Bitcoin's market share relative to the entire cryptocurrency market, is a key indicator of potential alt seasons. When Bitcoin dominance decreases, it often signals increased interest in altcoins:

  • During the 2017 bull run, Bitcoin dominance fell below 40%, indicating a strong alt season.
  • As of March 2024, Bitcoin dominance is holding steady at 53%, suggesting potential room for altcoin growth (Forbes, 2024).

Risks and Considerations

While some altcoins may outperform Bitcoin during bull runs, they also carry higher risks:

  1. Volatility: Altcoins often experience more extreme price swings than Bitcoin.
  2. Liquidity: Smaller-cap altcoins may have lower trading volumes, making it difficult to enter or exit positions.
  3. Regulatory Risks: Altcoins may face greater scrutiny from regulators, potentially impacting their long-term viability.
  4. Project Failure: Many altcoin projects fail to deliver on their promises, leading to significant losses for investors.

Conclusion

Historical data suggests that during Bitcoin bull runs, certain altcoins have the potential to outperform Bitcoin in terms of percentage gains. Sectors such as DeFi, NFTs, and innovative blockchain platforms have shown particularly strong performance in recent cycles. However, investors should be aware that while these opportunities may offer higher potential returns, they also come with increased risks.

As the cryptocurrency market continues to evolve, it's essential to conduct thorough research, diversify investments, and carefully consider risk tolerance when seeking to capitalize on altcoin performance during Bitcoin bull runs.

References

Coinmetro. (n.d.). Analyzing Historical Bull Runs: Lessons for the Next Crypto Surge. https://coinmetro.com/learning-lab/analyzing-historical-bull-runs

Forbes. (2024, March 7). Bitcoin Is Skyrocketing. Now Traders Are Looking At These Altcoins. https://www.forbes.com/sites/digital-assets/2024/03/07/bitcoin-is-skyrocketing-now-traders-are-looking-at-these-altcoins/