Traders are cautious about missing out on the surges in smaller cryptocurrency projects, causing them to put Bitcoin on the backburner in favor of these alternatives.
According to Santiment, a cryptocurrency analytics platform, the volume of Bitcoin discussions among market participants has dropped to its lowest point in three months as traders’ attention has been diverted towards multiple altcoins.
As per a post on X (Twitter), traders are apprehensive about potentially missing out on the rapid price increases of smaller cryptocurrency projects, leading them to shift their focus away from Bitcoin.
Traders Shift Attention to Altcoins
According to Santiment, there has been a surge in discussions about smaller projects like the decentralized application platform Loom Network (LOOM), decentralized lending protocol Cream Finance (CREAM), and the Solar blockchain (SXP), signaling growing greed among traders.
As a result of the increased attention on these projects, their respective native tokens, LOOM, CREAM, and SXP, have seen substantial gains in recent days. In just one week, LOOM has surged by more than 144% to reach $0.11, CREAM has risen by 65% to $17, and SXP has increased by 2.5%, with its current trading price at $0.28, as reported by CoinMarketCap.
Furthermore, these assets have collectively added millions of dollars to their market capitalization. Frontier (FRONT), ImmutableX (IMX), and Chainlink (LINK), along with LOOM, CREAM, and SXP, are all showcasing impressive results, surpassing the performance of the overall cryptocurrency market.
Santiment said that LINK, FRONT, and IMX may experience further surges in value thanks to positive in-car metrics. The platform also highlights LINK as one of the top-performing cryptocurrencies in September, noting that its price tends to rise when it’s added to exchanges.
Although LINK, LOOM, SXP, and IMX boast substantial market capitalizations reaching into the hundreds of millions of dollars, altcoins such as CREAM and FRONT have more modest market caps, each falling below $39 million.
Declining Liquidity in BTC Markets
Contrastingly, Bitcoin (BTC) appears to be facing a delicate situation with diminishing liquidity and reduced trading volume. Starting in Q1 2023, there has been a noticeable scarcity of BTC circulating on exchanges. By August, the cryptocurrency’s availability on trading platforms had dropped to levels not witnessed since December 2017.
As per reports, the dwindling market liquidity has emerged as a significant factor impeding the price growth of BTC. The spot and derivatives trading volume for Bitcoin has witnessed substantial declines, with a staggering 94% and 73% decrease since March 2023.
Simultaneously, Santiment’s research reveals that the number of addresses holding less than 100 BTC, representing approximately 41.1% of the cryptocurrency’s total supply, has reached an all-time high.
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