Small cap summer may end up being this bull market’s final form.
Think of it like the internal waves churning thousands of feet deep beneath the ocean — ones that finally summon a real altcoin season.
“Small cap” is a stock market term. It’s possible to sort the crypto market into different categories based on established equities definitions.
- Mega-caps are worth $200 billion or more
- Large-caps between $10 billion and $200 billion
- Mid-caps between $2 billion and $10 billion
- Small-caps between $250 million and $2 billion
Riffing on those benchmarks, mostly to account for crypto’s volatility, tokens can be placed in those buckets if they spent more than 50% of their trading days over the past three years above their respective benchmarks.
Stacks, for instance, only traded in the mid-cap range for 31% of its trading days since August 2021, so it goes alongside the other small caps.
There are currently over 50 mega-cap stocks but only two cryptocurrencies: bitcoin and ether. Crypto also only has five large-cap assets — bnb, solana, xrp, dogecoin and cardano — and around two dozen mid-caps including polygon, filecoin, cronos, monero and chainlink.
143 tokens otherwise represent small-caps. Coins such as pyth, dydx, worldcoin, blur, ondo, helium, celestia and bittensor.
Small-caps all spent most of the past three years (or however long they’ve been on the market) trading at a capitalization between $250 million and $2 billion. They may have spent weeks or even months above the $2 billion mark, but not long enough to transcend categories.
But when does small cap summer start? Just like how there’s no real definition of what makes an altcoin season (see previous attempts here and here), what makes a small cap summer has never been formally decided.
One could say that small cap summer starts when, as a cohort, small cap tokens are altogether worth more than mid-caps.
That unfortunately hasn’t happened since April 2022.
But we are closer now than we were this time last year — small caps are altogether worth $93.6 billion to $115.2 billion for midcaps, a difference of only 19% compared to over 30% in August 2023.
There is some hope. An overwhelming majority of small caps may have lost significant value over the past three months — but six in particular are keeping the dream alive.
Memecoins mog, brett and notcoin have all outperformed bitcoin and ether since May, and so have zcash, helium and ens.
In the memecoins’ case, they’ve all done multiples while bitcoin and ether are slightly underwater across the same period.
That only six out of 143 have shown real strength amid a bitcoin correction may however sound grim (it’s a strike rate of about 4%).
But if you’re looking for green shoots to mark the start of small cap summer, these could be it.
A modified version of this article first appeared in the daily Empire newsletter. Subscribe here so you don’t miss tomorrow’s edition.
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- altcoins
- market capitalization
- Memecoin