After nearing $74,000 this week, bitcoin prices (BTC-USD) have fallen below $69,000 on Friday. Is the bitcoin-led crypto rally beginning to cool after running hot in 2024?

Cumberland Labs DeFi Analyst Christopher Newhouse assesses the top crypto narratives as altcoins may be showing some promise and demanding more weight from investors in the space.

"For something like meme coins, which are very hot and very interesting right now, I would like to say those meme coin-driven investments are very attention-driven," Newhouse tells Yahoo Finance. "Whereas for some of these other altcoins and layer ones in the top 20 market cap, I'd like to say that's more narrative-driven. And in terms of thinking of timing, narratives are usually a longer duration of timing — being able to come up with what's going to be hot in three months... six months... [or] 12 months."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

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RACHELLE AKUFFO: A roller coaster week for Bitcoin yet again. After nearing $74,000 thanks to spot ETF demand, the rally has cooled at least for now. And as Bitcoin rallied and fell, the altcoins followed suit.

To break down Bitcoin's moves and why altcoins should be your next crypto bet, Christopher Newhouse, Cumberland Labs DeFi analyst is here. Thank you for joining me on this Friday. So I want to first set the scene with what we saw with Bitcoin's moves.

Because, obviously, as Bitcoin moves, we do tend to see the other tokens follow. But Bitcoin and then hopes of a spot Ether ETF as well really contributing to the rally here. What should we make of this pause that we're seeing?

CHRISTOPHER NEWHOUSE: Yeah, first of all, thanks for having me, Rachelle. In terms of the, kind of, pause that we're looking at right now, I'd like to say that the things that we're looking for heading forward are going to be specific narratives. You were seeing a lot of performance in these alt coins, a lot of these different layer ones, a lot of these narrative-centric tokens outperforming the current market environment right now. And from my perspective, sure, we've got this retracement, we've got a potential pause in the majors, but there are starting to be a lot of interest in specific altcoin narratives popping up.

I'd like to say that some of the alt coins that are super popular within the top 20 market cap, which, first of all, is a feat in and of itself. The alt coins that are actually moving right now are in the top 20 market cap. These coins have billions of dollars worth of dollars invested in these coins right now. Near, Avalanche, Ton, these are all that have their own very specific narrative behind them. And I think that that is what's driving the move right now for some of the altcoin outperformance.

RACHELLE AKUFFO: And I want to look at Filecoin, a coin that I'm watching here. What are some of the ways that you're seeing that outperforming and what's really supporting it?

CHRISTOPHER NEWHOUSE: Yeah, yeah, so Filecoin, I'd like to say, is part of the narrative that is known as decentralized physical infrastructure. And the physical infrastructure that is being decentralized by Filecoin is storage. One of the hottest narratives, I like to say, in the traditional markets currently is going to be the AI narrative, right? And one of the biggest things that I'm keeping my eye on in the traditional markets is the NVIDIA AI conference next week.

So the reason for performance I'd like to say for coins like Filecoin, Near, Render, and some of these other more decentralized physical infrastructure tokens, they're actually all focused on decentralized compute, decentralized storage. So from my perspective with Filecoin at the forefront there, they're focusing a little bit more on the storage. So I'd like to say that anything to do with storage, decentralized compute, that makes sense as to why the outperformance has happened so suddenly and so recently. It's because of the hot AI narrative that's going on in the traditional markets.

And now being able to invest maybe globally, I like to think about it from a different perspective here is if you're able to get access and exposure to traditional market narratives using the digital asset markets themselves, that's a more global market and more globally available. For people in different countries, being able to get access to pure AI exposure maybe through NVIDIA could be difficult. But being able to buy something like these tokens we've mentioned maybe gets access to the traditional narratives that are going on through the digital asset markets.

RACHELLE AKUFFO: And you raise an interesting point about there being two baskets when you're looking at some of these coins. Narrative, as you mentioned, but also timing. What are some of the front runners there?

Because, obviously, you can have something like Dogecoin popping up because Elon Musk is suggesting that potentially at some point, see more of it being able to be used to buy Teslas at some point. Some of these you consider a blip. How do you really navigate those two baskets?

CHRISTOPHER NEWHOUSE: Yeah, yeah, so from my perspective, crypto is a very narrative-driven, attention-driven economy, and it really depends on how you separate the verticals. So for something like meme coins, which are very hot and very interesting right now, I'd like to say that those meme-coin-driven investments are very attention driven. Whereas, for some of these other altcoins and layer ones within the top 20 market cap, I'd like to say that's more narrative driven.

And in terms of thinking about timing, narratives are usually a longer duration of timing. So being able to come up with what's going to be hot in 3 months, what's going to be hot in 6 months, what's going to be hot in 12 months that's something that's a little bit more narrative oriented and maybe some of these larger market cap altcoins and layer ones is going to be focused on that. Whereas, with the meme coins, it's very much so what's hot in the next 7 days, what's hot in the next 14 days, maybe what's hot in 2 days.

And that's kind of just looking at price action, volatility, what's going on in those specific meme coins as well. So I'd like to separate the timing in terms of two baskets. Is it a long-term narrative that'll be here for a while or is it an attention-driven narrative that'll only be a flash in the pan?