Where is altcoin heading in 2020?
The End of “Alt-Season”?
Figure 1: Crypto Total Ex-BTC Market Cap — YTD Chart (Source: Tradingview)
Small Names, Big Performances
Figure 2: ETH/XRP/XTZ/LINK/Crypto Total Ex-BTC Market Cap Comparison — YTD (Source: Tradingview)
What’s Behind the Divergence?
1. Bitcoin derivatives trading has been one of the fastest-growing parts in the crypto space. Demand for futures, options, and swaps trading has been increasing across all client segments. The spectrum of derivative trading has been getting wider with increasing product selections, such as the upcoming BTC options trading from OKEx. We believe that the growing derivative trading demand has been drawing the overall crypto investing needs away from the altcoin space, particularly from the institutional client group. This draw-away effect has been more noticeable in large-cap altcoins.
Figure 3a: OKEx BTC Futures Aggregated Daily Volume (Source: Skew)
Figure 3b: BitMEX XBTUSD Open Interest (Source: Skew)
Figure 4: BTC/Major Altcoins 30-Day Volatility vs. Daily Returns (Source: Coinmetrics.io)
The Shifting Narrative
Figure 5: Total ETH Locked in DeFi (Source: DeFi Pulse)
Furthermore, other major altcoins have also started to show distinctive characteristics. Some of them further go into the payment world, while some others committed to serving enterprise transaction needs. In addition to the bitcoin halving, this increasing vibrant environment could bring new impacts to the altcoin space in 2020.