XRP, LINK, ETH Stand Out Relative to BTC in Sector Rotation Analysis, DOGE Struggles

Crypto traders looking for clues on pockets of the crypto market seeing signs of green shoots might want to consider (XRP), Chainlink’s (LINK) token, and Ethereum’s ether (ETH).

That’s the message from Fairlead Strategies’ latest analysis of the 12-week relative rotation graph of top alternative cryptocurrencies (altcoins) relative to bitcoin (BTC).

The relative rotation graph (RRG) is a visual representation of the relative strength and momentum of multiple assets (altcoins) relative to a benchmark (BTC). The x-axis measures altcoins’ relative strength compared to BTC and the y-axis indicates the momentum of altcoins’ performance.

The graph comprises four quadrants: leading, weakening, lagging, and improving. The leading quadrant (top right) indicates strong relative strength and positive momentum, weakening (bottom right), strong relative strength but negative momentum. Lagging (bottom left) represents weak relative strength and negative momentum and improving indicates weak relative strength but positive momentum.

XRP’s move into the improving quadrant from the lagging quadrant, accompanying ETH and LINK, indicates the three coins still have lower relative strength compared to BTC, but their performance is gaining momentum.

“We use RRGs [relative rotation graph] to evaluate cyclicality among the top altcoins normalized versus bitcoin. A few altcoins have less downside momentum versus bitcoin, with Chainlink joining Ether and Ripple in the Improving quadrant,” analysts at Fairlead Strategies said in a note to clients Monday.

The positive shift from the lagging quadrant to the improving quadrant suggests a rotational opportunity could unfold in the coming weeks, whereby capital might flow into the improving sector as investors seek exposure to resilient corners of the crypto market.

Momentum traders tend to view the cross into the improving quadrant as a potential opportunity, indicating that the asset is showing signs of improvement and may outperform in the near future.

DOGE, SOL and BCH are in the weakening quadrant and point left, indicating a continued underperformance and an impending move to the lagging quadrant. The remaining top altcoins are already in the lagging quadrant, exhibiting both underperformance and negative momentum relative to BTC.