The alternative cryptocurrency (altcoin) sector is still reveling in its resurgence due to persistent investor interest in such digital assets amid Bitcoin’s (BTC) rally to a new all-time high of $72,000.
Analysts at the crypto exchange Bitfinex revealed in the latest weekly report that investor interest in altcoins is diversifying to meme coins and artificial intelligence (AI) projects.
Altcoins See Substantial Growth
The rising interest in altcoins is reflected in the market cap of the Total3 Index, which tracks the price performance of all cryptocurrencies except BTC and Ether (ETH). Last week, CryptoPotato reported that the index’s market cap hovered around $640 billion; however, the figure has surpassed $700 billion to touch a new high of $720 billion for the first time in this cycle.
Although the index’s market cap is 33% below its all-time high of $960.78 billion recorded in November 2021, it has come a long way from the bear market levels of $450 billion, illustrating substantial growth in altcoin interest and investment.
Zooming in, AI-related projects, meme coins, dog-themed coins, and cat-themed tokens are some driving forces behind the altcoin resurgence. Bitfinex said meme coin and AI indices on Coingecko have been up 32% and 38% in the last seven days. Cat-themed coins, in particular, have seen a 64% gain in the past week, recording a cumulative market cap of more than $750 million.
The uptick in the altcoin market cap correlates with a surge in market activity on Ethereum, leading to higher transaction fees not seen in roughly two years. The network’s fee revenue is on an annualized path to surpass $10 billion, as more than $190 million was collected in the past week.
BTC Rally to Trigger More Liquidations
Meanwhile, Bitcoin’s surge to $72,800 on March 11 could result in significant liquidations for long and short-positioned traders, as seen in the asset’s previous attempts to move past its last all-time high of $69,000.
Bitfinex warned that BTC traders will face increasingly leveraged and volatile markets in the short term. The extent of the risk was illustrated on March 5, when BTC rallied to $69,000 before falling to roughly $59,000 within four hours, triggering $1.18 billion in long and short liquidations.
“Even if you are positioned correctly in the markets however, sharp price movements like those observed last week, can lead to liquidations,” analysts stated.
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