Key Takeaways
Bitcoin reached fresh all-time highs on Monday, but altcoins are running the show, with Ethereum back above $5,000 AUD.
- Adoption from corporate America is growing as more altcoins, like BNB and HYPE, are being added to treasury balance sheet strategies.
- Chart of the week: Altcoin vs Bitcoin performance at similar levels as 2020/21.
The last week may have caught many off guard. Numerous altcoins are suddenly boasting double-digit gains as we cross the middle of July.
There is a lot happening outside of the markets to explain why this is all occurring; more on that soon.
But, in my opinion, the real winner in the last few days has been two notable segments of the market – Ethereum and memecoins. A standout in the memecoin sector has been BONK with a 51% weekly gain at the time of writing.
I wrote in last week’s Squawk how the script seems to be flipping in the US with publicly listed companies taking positions in Ethereum, rather than Bitcoin, on their treasury balance sheets. I believe this is a meaningful trend to pay attention to.
First, let’s dive into other corporate treasuries that are investing in assets other than Bitcoin and Ethereum.
Demand for crypto continues from corporates
Public companies traded on stock exchanges in the US are continuing to add crypto to their balance sheets. The aim is simple: to diversify revenue lines and emulate what Michael Saylor has done with MicroStrategy (now known as Strategy).
At the start of the week, Nasdaq-listed biotech company Sonnet BioTherapeutics announced a complete company strategic pivot into crypto. Unveiling an $888 million plan to launch a Hyperliquid (HYPE) digital asset treasury.
Related: Hyperliquid: Building for the Future
Windtree Therapeutics has launched a $200 million USD BNB Treasury Strategy to diversify its financial portfolio. The company aims to raise $60 million initially through a subscription of shares.
Which assets will companies adopt as they move into crypto? If the altcoin trend remains strong, any asset is a possibility, but the current demand is for yield-generating infrastructure tokens.
Next, we’re going to use some data to explain the relative strength shift we are seeing in altcoins and why this move is historically significant.
Chart of the week: Altcoin vs Bitcoin performance at similar levels as 2020/21.
This reaction we are seeing in altcoins draws technical similarities to the altcoin market’s performance toward the end of 2020 and the start of 2021.
The ticker ‘OTHERS’ measures in US dollars the total market cap of altcoins outside the top 10. It’s essentially a measurement to describe the interest in the altcoin sector.
We then simply divide OTHERS by the price of Bitcoin to understand if altcoins as a whole are outperforming Bitcoin.
What you need to know is that altcoin valuations, when compared to Bitcoin, are at similar levels to those that resulted in a multi-month altcoin sector rally during the 2020/21 market cycle.
While history doesn’t guarantee future results, it does serve as a good reason to pay attention.
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