With the crypto market rally, altcoins have benefited like bitcoin. Digital assets across the board have managed to return to pre-FTX collapse levels, signaling the start of a bull run. However, as the market begins to settle into this new normal, investors are moving their profits from larger cap assets to take advantage of possible price movements in smaller altcoins.
Cycling Out Money Into Small Cap Altcoins
A new report from on-chain data aggregation website Santiment show that investors can move their money out of larger capped coins such as Cardano and Solana and into smaller capped coins. This reflects the image of fund rotation instead of directly pulling money out of the crypto sector.
Santiment notes that the big gains recorded by Solana, Cardano, and Polkadot are now shifting to smaller altcoins. Most of these coins are above 200 and below tokens with a market cap lower than $300 million.
The circulation of funds to these small altcoins is indicated by the activity of the address. The image shared by Santiment shows a significant increase in the activity of the coin’s address. Most importantly, the uptick is visible from last week as many of these larger coins hit new local highs.
Money flows out from large cap to small cap altcoins | Source: Santiment
Small cap coins mentioned in the report are TRADE, RBN, SLP, PLSPAD, POND, MITX, MTH, and CBG. Most of these coins fly under the radar. Ribbon Finance (RBN) tops the list at just $139.7 million in market cap but is up 24% in the last seven days.
What Happened to These Tokens?
The tokens mentioned by Santiment are still small enough to see significant movement with only a fraction of the amount needed to move prices like SOL and ADA. This means that if the rotation of earnings from large caps to small cap altcoins continues, then the token could see positive movement in the coming days.
However, for coins with such a low market cap, just as it is easy to pump prices, it is also easy to drag prices down with the sell-off of some big holders. It becomes a double-edged sword for investors who follow the movement. On the one hand, it can mean very large profits in a short period of time, but on the other hand, it can see people losing money quickly.
A good thing about this though is that the attention is spread out instead of just focusing on a handful of coins. As wallet activity increases for these altcoins, it can trigger exploration into similarly priced altcoins that can benefit from new interest.
Crypto market cap crosses $1 trillion as investors move money around | Source: Crypto Total Market Cap on TradingView.com