Solana (SOL) and Avalanche (AVAX) price lead among large-cap altcoins on Dec. 21 as Bitcoin (BTC) price hovers near $44,000. The steady bullish momentum in altcoins comes after Bitcoin price failed to secure the $45,000 level, which has stood as resistance since the initial run-up on Dec. 5.
With $45,000 standing as the current resistance level, Bitcoin’s market dominance has also begun to pull back from 53.95% to 53.17% and as shown in the chart below, altcoin market dominance (TOTAL2) has risen concurrently.
Traders who use technical analysis typically view a combination of a drop in Bitcoin dominance and BTC range-bound trading or price consolidation as a possible sign that altcoin prices could break out.
In addition to this, looking at the interplay between the U.S. Dollar Index (DXY) and BTC price is often a sentiment gauge cited by technical traders. Currently, the DXY is down 1.56% on the month, whereas Bitcoin price is holding a 16.18% gain in the same time period.
Many traders believe that DXY’s reversal is primarily influenced by recent comments from Federal Reserve Chair Jerome Powell and FOMC minutes hinting at the potential for three interest rate cuts in 2024.
With the expectation of a spot Bitcoin ETF approval in Q1 2024 and the markets’ belief that the Fed’s interest rate hike regime has ended, the general sentiment for crypto assets has remained on the border of euphoria.
Related: Bitcoin traders see $48K BTC price before ETF ‘sell the news’ event
Solana and Avalanche reach for new 2023 highs
According to Cointelegraph analyst Marcel Pechman, a handful of network-related and technical factors are driving SOL price closer to $100. On Dec. 20, SOL overtook XRP in market capitalization, ranking it as the fourth-largest cryptocurrency, excluding stablecoins.
A significant factor contributing to this increase is the improved user experience on Solana, particularly for token and nonfungible token (NFT) launches. The network’s focus on mobile accessibility, as emphasized by its mobile platform @solanamobile, is attracting new users who prioritize ease of use over other factors like decentralization. This user-friendly approach, combined with Solana’s capabilities for handling high-capacity projects and its low transaction costs, positions it as a strong competitor in the cryptocurrency market, especially against Ethereum, which is currently facing pressure due to these advancements.
The current rally in SOL’s price is partly driven by the enthusiasm surrounding airdrops, the listing of the newly launched SPL token JITO on major exchanges and its subsequent success, with a market capitalization exceeding $300 million shortly after trading began. In addition to these factors, SOL’s recent surge is supported by the growth in decentralized applications (DApps) on the Solana network.
Over three weeks, the total value locked (TVL) in Solana grew from $654 million to $1.28 billion, a 96% increase. This growth outpaced that of its competitors, with the number of unique active addresses interacting with Solana’s DApps also showing a significant rise.
Similar trends are seen in the Avalanche ecosystem, where an uptick in DApp users, various DeFi protocol incentives and the persistent rumor of airdrops have led to an uptick in inflows, daily active users and AVAX price.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.