Altcoin "Euphoria" Phase Awaits 16% Market Cap Jump, Trader Predicts

A prominent crypto trader has predicted that the "euphoria" phase in the altcoin market will not begin until the total market capitalization of altcoins rises by approximately 16%. Until that happens, he suggests that the market will likely remain volatile and "choppy."

In a post shared on X (formerly Twitter) on December 28, pseudonymous trader Daan Crypto Trades explained that the "euphoria" or "mania" phase — often associated with explosive altcoin rallies — should kick off once the TOTAL3 index surpasses its previous all-time high (ATH) of $1.13 trillion, reached in 2021. The TOTAL3 represents the combined market capitalization of all cryptocurrencies except Bitcoin (BTC) and Ether (ETH).

At the time of writing, TOTAL3 stands at around $962.78 billion, showing a significant 91.45% increase since the start of the year. However, Daan warns that the market will remain choppy as long as the total market capitalization stays within a range of approximately $840 billion to $1.1 trillion. He further cautioned that if the TOTAL3 dips below $800 billion, caution would be necessary, as it may indicate potential downside risks.

Volatility Ahead as Traders Adopt Short-Term Mindset

The altcoin market's volatility has been attributed to a shift in trader behavior, with more market participants adopting a short-term outlook. Daniel Cheung, co-founder of Syncracy Capital, pointed out in a December 28 post that many traders seem to have adopted a "George Soros" mentality, constantly monitoring hourly charts and making decisions based on short-term price movements. This shift in strategy, he explained, has contributed to a slower pace of breakouts compared to previous cycles.

In previous bull runs, altcoins often experienced rapid rallies, but this time, market participants appear to be more cautious, leading to less dramatic price action.

Rotation to Altcoins as Bitcoin Dominance Eases

As Bitcoin dominance hovers around 60%, some traders are shifting their focus toward altcoins. Despite Bitcoin's dominance in the market, there has been a growing sentiment among traders that altcoins may offer more favorable risk-to-reward (R/R) profiles at this juncture.

Pseudonymous trader Dyme, in a post from December 27, highlighted that the time for dollar-cost averaging (DCA) into Bitcoin may be over for the next year or more. Instead, he believes that altcoins present more attractive opportunities for traders at this stage. His comment underscores the growing interest in altcoins as the market looks for the next big breakout.

Key Altcoin Performers

Recent data from CoinMarketCap shows that some altcoins are already making significant gains, with Bitget Token (BGB) leading the charge with an impressive 80.65% rise in the past week. Other top performers include Virtuals Protocol (VIRTUAL), which saw a 42.30% increase, and Pudgy Penguins (PENGU), which gained 31.63% in the same period.

As the crypto market continues to evolve, traders are closely watching the performance of altcoins and looking for signs of the impending "euphoria" phase. While the market remains volatile, the shift towards altcoins is becoming increasingly evident, with many investors positioning themselves for what could be the start of a new cycle.