Altcoin Surge: Bitcoin Holds at $35K Marking Early Bull Market Shift

Throughout this week, Layer 1 cryptocurrencies and DeFi tokens experienced a surge in value, while bitcoin and ether remained relatively stable. Bitcoin (BTC) made several attempts to sustain a value above $35,000, but these efforts proved unsuccessful. One analyst suggests that traders may have cashed in their profits from BTC and redirected their investments towards altcoins, causing their prices to rise.

BTC's price fluctuated mainly between $34,000 and $35,000 during the week. Despite briefly touching a new yearly high of nearly $36,000 on Thursday, each upward move was met with substantial selling pressure, leading to a decline in price. By the end of the week, Bitcoin was trading at around $34,400. This represented a modest increase of just under 2% for the week, while ether (ETH) experienced a similar gain.

Simultaneously, major tokens associated with Layer 1 networks, including Avalanche (AVAX), Cardano (ADA), and Polkadot (DOT), saw notable increases in value ranging from 10% to 15%. Additionally, Solana (SOL) reached a 14-month high on Wednesday and maintained a 25% increase over the previous seven days.

The native token of the bankrupt crypto lender Voyager Digital (VGX) also saw a surge of 20% on Friday, potentially attributed to around 30% of the token's supply being sent to a burn address, hinting at potential plans for destruction.

Lucas Outumuro, the Head of Research at IntoTheBlock, observed that the outperformance of smaller, riskier tokens indicates a shift in capital allocation from bitcoin and ether following their significant rallies. This pattern aligns with the historical trend in crypto cycles, where BTC leads the initial surge, followed by ETH, and then capital gradually flows towards lower-cap and riskier investments. This week's developments suggest that this rotation is beginning to take shape, with BTC and ETH maintaining stability, while DeFi and alternative Layer 1 tokens demonstrate a strong resurgence.

Outumuro also emphasized that despite the shift towards riskier assets, the demand in the crypto market appears to be relatively organic, primarily driven by spot buying. While there may be signs of short-term price momentum overheating, there are also indications of sustainable demand fueling the overall uptrend in the crypto market.

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