Cryptocurrency analysis firm Santiment has highlighted the recent profitable trend for altcoin owners, based on their analysis. The firm’s data reflects significant earnings among these investors since the crypto market’s positive shift in mid-October 2023. Despite the substantial gains, Santiment warns of the potential risks, particularly emphasizing the dangers of overbuying and the precarious nature of opening new investment positions.
Surge in Altcoin Values Raises Caution
Santiment’s report indicates that altcoin wallet holders have seen considerable profits, but these remain unrealized. The company advises caution due to the increasing risk associated with the current market. They have highlighted warning signs of potential overinvestment in the altcoin sector. Furthermore, Santiment points out that altcoin development and pricing are closely linked with Bitcoin‘s market performance, making Bitcoin’s stability a critical factor for altcoin investors.
Recent figures show Ethereum’s price climbing by 10.54% over the previous week. Additionally, altcoins like Cardano (ADA) and Polygon (MATIC) have also experienced notable increases, with ADA up by 13.59% and MATIC by 13%, yielding profits for their investors.
Risks of New Market Entries Amid Rising Prices
The cryptocurrency market’s current uptick is generating excitement among investors. During this period, the MVRV (market value to realized value) ratio is gaining prominence as an evaluation tool for asset price movements. The ratio can signal whether asset prices are over or undervalued, aiding investors in making informed decisions.
However, based on the MVRV metric, the risk associated with initiating new positions after a four-month rally appears to be heightening. This trend is also creating anxiety about a possible significant market correction in the near future.