Ethereum Classic (ETC), Filecoin (FIL), and Lido DAO (LIDO) dominate the altcoin industry as they outperform Bitcoin and other major cryptocurrencies. The first crypto by market capitalization records its best month in 2022 but is still far from the average monthly return of these tokens.
According to Arcane Research, altcoins have seen an average performance of 40% over the past month as the crypto market experienced a “classic relief rally.” July was a historic green month for digital assets.
During this period, the nascent asset class has seen the expansion of two critical sectors, decentralized finance (DeFi) and non-fungible tokens (NFT). As seen below, the rally was particularly positive for mid-cap cryptocurrencies.
This market rally translated into a reduction in market share for Bitcoin and stablecoins, suggesting increased risk appetite for crypto investors and more strength for Ethereum. Arcane Research noted:
Ether’s lack of strength against bitcoin last week reversed this week as ether increased its market share by 0.43 percentage points, while bitcoin lost 0.22 percentage points. Notably, bitcoin and stablecoin are losing market share this week (…).
Ethereum could be key to understanding the current price action. The cryptocurrency has a tentative rollout date for “The Merge,” the event that will combine its Proof-of-Work layer with its Proof-of-Stake consensus layer.
Altcoins, such as Lido Dao and Ethereum Classic, could benefit from the impending change to this blockchain. The former cryptocurrency rallied because more users want to stake their ETH and participate in the Ethereum (2.0) consensus model to receive rewards.
Ethereum Classic saw positive performance as it could become a safe haven for ETH miners. This sector faces inevitable destruction as ETH’s new consensus model will validate transactions with a different mechanism.
Will the merger provide Altcoins with further bullish momentum
In this sense, and until the launch of the mainnet “The Merge”, altcoins could continue to extend their bullish trajectory. Data from a pseudonymous user underscores the significance of this event and why it could inject new capital into this ecosystem, further driving the price of Ethereum and the altcoin industry.
The user claims that this cryptocurrency will become environmentally, socially and governance (ESG) friendly. This will give new institutions the confidence to bet on the long-term success of Ethereum. The user said:
Whatever your personal thoughts on ESG, if you want the adoption of mainstream crypto-assets to control the discourse on emissions and sustainability, it is essential. Bitcoin decided to ignore the problem; Ethereum unlocking from PoW should be a boon for both assets.