Crypto analyst Darkfost says that since late August, small- and mid-cap crypto assets have seen the most significant market-cap growth. Their current ratio of monthly average market cap to annual average market cap is 41%, compared with around 7% for BTC and 3.5% for large-cap crypto assets. These ratios are better understood as a measure of how far recent market caps have deviated from their annual baseline, rather than as evidence of net inflows.
Darkfost notes that this pattern is relatively rare, since markets are usually led by BTC—for example, during the rally following the end of the 2023 bear market. This time, however, small- and mid-caps are leading. For traders, the key is not to treat 41% as confirmation that prices will keep rising, but as an indicator that “recent expansion has been more pronounced among small- and mid-caps.” If the ratio falls quickly, monthly average market caps will converge toward their annual baseline. Small- and mid-cap assets are also more sensitive to market shifts, so the trend could reverse quickly. $BTC
Darkfost notes that this pattern is relatively rare, since markets are usually led by BTC—for example, during the rally following the end of the 2023 bear market. This time, however, small- and mid-caps are leading. For traders, the key is not to treat 41% as confirmation that prices will keep rising, but as an indicator that “recent expansion has been more pronounced among small- and mid-caps.” If the ratio falls quickly, monthly average market caps will converge toward their annual baseline. Small- and mid-cap assets are also more sensitive to market shifts, so the trend could reverse quickly. $BTC