Novogratz Wondered About the 'Mysterious' Altcoin Rally
The prominent Bitcoin bull Mike Novogratz admitted to his followers on Twitter that he struggles to understand the recent altcoin rally.
“I’m not sure I understand the altcoin rally. Happy for those making money on it. But not sure what changed. Maybe new year, new money, new enthusiasm. Dinner in NYC for best explanation,” Novogratz tweeted earlier this week.
As would be expected when one of the wealthiest investors in the crypto space offers a dinner, people are eager to help out, offering a variety of explanations for the rally.
Among the explanations offered, some questioned whether an altcoin rally is really taking place, saying “it’s just a bull trap for the morons.” However, the ex-investment banker also received more serious explanations, such as this one from Saifedean Ammous, author of The Bitcoin Standard book:
“Altcoins have approximately zero liquidity, so when bitcoin starts to rise, it only takes a little bit of money seeking "diversification" to make altcoins rally. As alt liquidity rises & their numbers swell, the effect dissipates.”
Others argued that the market over the past few days have been mostly driven by the action in Bitcoin SV (BSV) and the drama surrounding Craig Wright:
“There is no altcoin rally. It’s Bitcoin (BSV) leading with altcoins lagging behind,” said one user. Other users, however, had the opposite take, likening the BSV rally to a classic pump-and-dump scheme, saying “They are more or less pump and dump schemes. The most obvious example of this is BSV.”
The popular crypto analyst Mati Greenspan from Quantum Economics also joined the discussion, saying that Tuesday alone saw an increase in the total value locked in Decentralized Finance (DeFi) smart contracts by 16%, to a total of nearly USD 800 million.
“It seems that during yesterday's little bout of crypto volatility there was a significant increase in the amount of money being deployed in this new area of the market. Presumably, traders were using this new option to increase their capital in order to take advantage of the huge moves in the market,” Greenspan noted.
Bitcoin dominance, or the percentage of the total market capitalization, dropped by 2 percentage points, to less than 66% in the past week.
However, the community appears largely skeptical.
“No. He’s a hype man going low brow with a low volume exchange he bought and turned into just another TRX hype tool. Little to nothing to do with recent alt moves,” said one user.
“Doubt any one piece of news, single exchange, or single alt can pull up the entire market. It is mostly macro supply and demand and highly correlated (to each other and to BTC),” another Twitter user suggested.
Meanwhile, bitcoin and majority of altcoins are in red today.