Crypto: Seizing Altcoin Opportunities

First, let us have a review of Bitcoin. At present, it seems that the buying power is insufficient to keep the price going up. The inflow of funds into ETFs has decreased, and the sentiment of Asian investors has also begun to wane. LTH has accelerated the distribution of Bitcoins held. From the URPD chart, the huge volume of trading is at around $97000-$98000. If the price pulls back below this price cluster, this part of positions may impose a strong selling pressure.

Source: Glassnode

Source: Glassnode

Source: Glassnode

Source: Glassnode

The logic of crypto sector rotation during a bull market is that BTC leads the rise, followed by the spillover funds driving large-cap altcoins like Ethereum, and then rotating to smaller-cap altcoins. As BTC reaches $100,000, other altcoins will also have good performance opportunities.

In this report, I will explore three of the most popular smart contracts platforms: Ethereum (ETH), Solana (SOL), and Binance Smart Chain (BSC). The objective is to analyze these platforms through various metrics and identify potential investment opportunities. Currently, BNB and SOL have hit new highs, while ETH is lagging slightly. ETH has the potential to reach the previous high of $5,000, and fund to spot ETF is also continuing to inflow.

Source: Glassnode

Ethereum (ETH)

Ethereum stands as the second-largest cryptocurrency by market capitalization and the trailblazer in integrating smart contracts into the blockchain ecosystem.

Key Features:

●Decentralized Applications (dApps): Ethereum supports a wide array of dApps, including DeFi platforms and NFT marketplaces.

●Consensus Mechanism: Currently using Proof of Work, transitioning to Proof of Stake.

●Market Dominance: Despite facing challenges, Ethereum remains a key player in the smart contracts domain.

●Layer 2 Solutions: Projects like Polygon offer Layer 2 solutions to enhance Ethereum's scalability.

●Developer Community: Ethereum boasts one of the largest developer communities, driving innovation and adoption.

Solana (SOL)

Solana is a high-performance blockchain platform designed to handle a substantial number of transactions per second. Launched in 2020, Solana aims to offer a scalable and cost-effective solution for decentralized applications.

Key Features:

●Transaction Speed: Solana's high transaction throughput makes it suitable for real-time applications.

●Consensus Mechanism: Utilizes Proof of History for enhanced security and scalability.

●Adoption by Memecoin Projects: Solana has become a hotspot for memecoin projects, driving network activity and user engagement.

Binance Smart Chain(BSC)

Binance Smart Chain  is a blockchain platform developed by Binance, one of the largest and most popular cryptocurrency exchanges globally. BNB, the native token of BSC, its value is determined by supply and demand dynamics. Binance offers various user welfare programs and discount schemes, some of which require users to hold a certain amount of BNB. The demand for BNB can also increase due to the attractiveness of these programs and schemes, thereby influencing its price.The market's perception and confidence in the Binance exchange itself can also impact the value of BNB. If investors trust and recognize Binance, they may be more willing to use BNB for transactions, which could also drive up its price.

Key Features:

●Consensus Mechanism: Proof of Staked Authority

●Utility Token: BNB's value is closely linked to the success of the Binance exchange.

●Ecosystem Expansion: Binance continues to expand its ecosystem, launching new features and services.

Transaction Fees:

Trends: Solana's network activity has been escalating rapidly, surpassing both BNB and ETH in transaction fees. This indicates increasing popularity and adoption of dApps on the Solana network.

Source: Glassnode

Over the past few years, Solana has been steadily eating up market share from Ethereum. Solana's advantages over Ethereum include its faster transaction, greater scalability, and lower costs. In the past year, memecoins have been a core narrative of this bull market and have been the best-performing sector in the cryptocurrency space. Most memecoin activity has occurred on Solana, and the surge in activity within the Solana network, particularly around memecoin trading platforms like Pump.fun, has significantly boosted its market share, driving up transaction volumes and user engagement on the Solana network.

Source: The Block

Total Value Locked (TVL)

Total value locked (TVL) is a metric to determine the total U.S. dollar value of digital assets locked, or staked, on a particular blockchain network via decentralized finance (DeFi) platforms or decentralized applications (dApps). It represents the overall value of capital deposited by users to provide liquidity, earn staking rewards, or participate in lending, borrowing, or other DeFi activities. Staking is a process where crypto holders lock up their coins or tokens in a wallet or a staking platform to support the operations and security of a blockchain network.The rewards come from newly minted coins and transaction fees paid by users of the network.

Higher TVL indicates greater user confidence and activity. Ethereum leads with $75 billion in TVL. Solana has as $9 billion in TVL, indicating significant growth potential.

Source: DefiLlama

On-Chain Activity

We incorporate three metrics to comprehensively assess on-chain activity: Number of Active Addresses, Number of Transaction Count, and Transfer Volume. When all three of these metrics increase, it indicates strong on-chain activity, rising attention, and a higher likelihood of price appreciation.

●Active Addresses: Ethereum leads with the highest number of active addresses. However, Solana's growth rate is impressive since September.

●Transaction Counts: Solana has the highest transaction counts. Ethereum's transaction count is high but limited by scalability issues.Ethereum's current consensus mechanism, Proof of Work (PoW), limits the number of transactions it can process per second (TPS).

●Transfer Volume: Ethereum has the highest transfer volume, driven by its status as the leading smart contract platform. Solana and BNB also have high transfer volumes, with Solana showing rapid growth.

In terms of on-chain activity, both ETH and BNB are currently seeing increasing attention.

Source: Glassnode

Source: Glassnode

Source: Glassnode

In conclusion, each of these smart contracts platforms offers unique advantages and investment opportunities. Ethereum's dominance, Solana's high growth potential, and Binance's status as biggest exchange provide a diverse range of options for investors. By monitoring on-chain activity, we can identify when it is a good time to build more positions.