Altcoin Movement - Are Some Cryptocurrency Overbought

 

A number of altcoins are experiencing unwarranted price increase. Dogecoin has grown by a whopping 11,853.75% in the last year. This is significantly higher than Bitcoin's growth of 739.93%. However, when compared to popular cryptocurrencies such as Bitcoin and Ethereum, the value of Dogecoin remains significantly lower. Musk has been a prominent supporter of Dogecoin for some time. On Thursday, he tweeted a photo with the caption, "dog barking at the moon." It hinted at Dogecoin's meteoric rise in the cryptocurrency market. The once-dominant asset is now worth $0.4371 and has a market capitalization of $19.8 billion. When compared to its price in October, this appears to be a positive sign. The price of XRP was $0.2261998 and the market cap was $11,8B. Despite the fact that both of these figures have increased, Ripple is rapidly falling behind its competitors. The majority of altcoins that entered the market were created to address some of the issues that their creators believed would eventually limit the success of Bitcoin, the so-called king of cryptocurrency. Ripple, on the other hand, targeted another distinguishing feature of cryptocurrency: its decentralization.

Are altcoin markets overbought?

Altcoins accounted for 40% of the total cryptocurrency market in March 2021, with over 9,000 cryptocurrencies and counting. Mining-based cryptocurrencies, stable coins, security tokens, and utility tokens are some of the most common types of altcoins. In the future, as technology advances, altcoins may only include mining-based cryptocurrencies other than Bitcoin. As of March 2021, the largest altcoins by market capitalization were Ethereum and Binance Coin. So, it is evident that the altcoin markets are overbought.

What's causing the flood of capital into altcoins at the Moment? 

Altcoins have created a market for themselves by distinguishing themselves from Bitcoin in this way. As a result, they have attracted investors who see them as viable alternatives to Bitcoin. Investors expect to profit as altcoins gain traction and users, and as their prices rise. In the last decade, the number of altcoins listed on cryptocurrency exchanges has rapidly increased, attracting holders of retail investors who are betting on their price movements to amass short-term profits. However, such investors lack the capital required to generate adequate market liquidity.

Will we see a sharp correction in altcoin prices anytime soon? 

Yes, a sharp correction in altcoin prices can be seen. Cryptocurrency markets are still in their infancy. Despite numerous attempts, there are no established investment criteria or metrics for evaluating cryptocurrencies. The altcoin market is primarily driven by speculation. There have been several cases of dead cryptocurrencies, which failed to gain enough traction or simply vanished after collecting investors money. As a result, the altcoin market is for investors who are willing to take on the enormous risk of operating in an unregulated, emerging market prone to volatility. They should also be able to deal with the stress that comes with wild price swings. Cryptocurrency markets provide excellent returns for such investors.

Conclusion

Altcoins are "better versions" of Bitcoin because they seek to address the shortcomings of the cryptocurrency. Stable coins, for example, have the potential to fulfil Bitcoin's original promise of being a medium for daily transactions. Certain altcoins, such as Ethereum's ether and Ripple's XRP, have already gained traction with mainstream institutions, resulting in skyrocketing valuations. Investors can select from a wide range of altcoins that serve various functions in the crypto economy