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As bitcoin hits another record high, why smaller crypto coins still lag behind
Bitcoin has hit another record high. But it hasn’t brought other cryptocurrencies along for the ride.
The largest cryptocurrency BTCUSD briefly traded at $109,497 on Wednesday, an all-time high, surpassing its previous high of $109,225 set on Jan. 20, President Donald Trump’s inauguration day. Bitcoin rallied along with gold GC00, while stocks tumbled Wednesday afternoon, with the Dow Jones Industrial Average DJIA recording its worst day in a month.
However, most other smaller cryptocurrencies were not performing as well.
Ether ETHUSD, the second-largest cryptocurrency, was still 64% below its record high at $4,105 set in November 2021, though it has traded up 45% over the past 30 days. XRP XRPUSD, the fourth-largest crypto following Tether USDTUSD, a stablecoin with its value pegged to the U.S. dollar, traded 29% below its all-time high reached in January. Solana SOLUSD, often considered a strong competitor to ether, was 36.6% away from its record high recorded in January.
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For altcoins to catch up, investors will need to see a clear breakout in bitcoin’s price above its previous all-time high, according to John Glover, chief investment officer at crypto financial-service firm Ledn. Altcoins, which refer to cryptocurrencies with market capitalization smaller than bitcoin’s, often follow bitcoin’s rally, Glover said in emailed comments.
A clear breakout means that bitcoin needs to trade above $110,000 for at least 24 hours, Glover added. “That way you get the market across the globe to react to the ‘breakout,’” he said.
Altcoins will also need to see more regulatory clarity, which has already benefited bitcoin and helped it attract more institutional attention, according to Gerry O’Shea, head of global market insights at crypto asset-management firm Hashdex.
While there have been exchange-traded funds investing in bitcoin and ether, there haven’t been such products investing directly in other cryptocurrencies.
In positive news for the industry, a bill aiming to regulate stablecoins, or cryptocurrencies with their value pegged to another asset, moved through a procedural vote on Monday , allowing Senate Republican leaders to bring the legislation to the floor for a final vote, which could happen as soon as this week.
If enacted, the legislation could power more stablecoin adoption and benefit the blockchains where the stablecoins are issued, such as Ethereum, O’Shea said.