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Pro traders can’t resist lure of risky altcoins as Bitcoin skyrockets 260%

Pro traders can’t resist lure of risky altcoins as Bitcoin skyrockets 260%
Credit: Shutterstock / orhan akkurt
  • Bitcoin and Ethereum dominate the crypto markets, but a shift to risky assets is coming.
  • Altcoins are getting more attention among both retail and institutional traders.

Bitcoin and Ethereum reached prices last seen in the second quarter of 2022 this week. Now, traders are looking beyond the leading pair for returns.

Retail and institutional traders can’t resist the lure of altcoins, according to Coinbase.

Let’s dig in!

Risky business

Change is afoot in crypto markets as Bitcoin and Ethereum’s dominance shows signs of waning.

Retail traders have already gotten comfortable with riskier crypto assets, according to Coinbase sales trader George Toropov. Now institutions are showing “a lot more interest in altcoins.”

Altcoins have smaller market capitalisations and lower trading volumes. As a result they are prone to sharp spikes in volatility.

Less liquidity means its easier to move the market in these assets. The risk is higher for anyone braving the elements, and so is the reward.

There’s a stark difference between what pro traders and retail traders are doing right now though, Toropov said in a webinar Tuesday.

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In the summer, Bitcoin and Ethereum accounted for 90% of overall volume traded on the exchange. That’s fallen to around 70% he said.

The move to altcoins is more on the retail side for now, but its slow starting on the institutional side.

Given the lessons of the past pro traders are a lot more cautious, but they’re beginning to get comfortable with more risk, Toropov said.

Stacks, a blockchain platform linked to Bitcoin which enables smart contracts, has seen its native token STX attract increased interest recently.

When Bitcoin traded around $35,000 in November, traders looked to the altcoin for gains, according to Toropov.

Celestia’s TIA has also performed well. Coinbase attributed its success to the rising popularity of modular chains. If that term is new, think of it as dropbox for chains, as DefiLlama’s 0xngmi said on X.

Crypto market movers

  • Bitcoin slipped 0.6% to $43,600.
  • Ethereum added 3.6% as it reached a new yearly high above $2,300.
  • Altcoins experienced sharp increases since Wednesday. Solana’s SOL added over 4%, while Avalanche’s AVAX gained 2.2%.

What we’re reading

Adam Morgan McCarthy is DL News’ London-based Markets Correspondent. Got a tip? Reach out at adam@dlnews.com.