2019 has been a year full of optimism. After the huge crypto crash in 2018 (known as crypto winter), everybody is now an optimist again. Thanks to Bitcoin’s pump from less than $3500 to above $11000, everybody seems to agree that the market has finally recovered. Many top altcoins also enjoyed their huge increase in valuation against fiat currencies. However, there’s one trend that I notice. Bitcoin typically moves much higher than altcoins while altcoins dump less hard than Bitcoin recently. Let’s analyze what has happened in the past and what’s the correlation between Bitcoin and other cryptocurrencies.
Note: Cryptocurrencies other than Bitcoin are defined as ‘altcoins’.
How Whales See Altcoins
Considering many whales have been trading since 2011-2013, typically they see cryptocurrencies as two categories. It’s either bitcoin or altcoins. I know it’s a bit weird how some bitcoin whales don’t really differentiate different altcoins, but that’s how the market has been behaving minus some exceptions within specific periods of time. Back in 2018, when bitcoin crashed hard, most altcoins crashed even harder. Some altcoins lost 99% of their valuation while bitcoin only went down less than 86%. However, in the same year, when bitcoin went up, typically altcoins went up way higher as well.
This year has been quite different so far. In the first few months, some altcoins pumped significantly higher than bitcoin. Nowadays, however, bitcoin always pumps harder than altcoins. When bitcoin goes down 4-5% against fiat currencies, altcoins goes down less hard. You can check how top altcoins even pumped against BTC when it’s a bad day for Bitcoin. Of course it’s not always the case but recently it has been like this. Take a look at the chart below:
From here, you can see that altcoins’ pricing against BTC has been going up in the past 24 hours until the time of this post writing (July 5, 20:00 UTC). BTC itself lose 4-5% of its valuation against USD. Meanwhile, when BTC pumps significantly, altcoins often lose their value against BTC despite they might still pump a little bit against USD. This is the opposite effect of 2018. In 2018, cryptocurrencies often moved together but altcoins often had much more volatile movement than BTC. Many people praised these changes in 2019 as a testament to Bitcoin market dominance.
From the above image, you can see Bitcoin is dominating the cryptocurrency by about 62.02% this week. It has been steadily going up from January 2018. Many people predict BTC dominance in the market will keep going up along with the bull market. Maybe (just my prediction), after Bitcoin’s halving in 2020, we will have 1-2 sessions of altseason. Let’s see
Will It Stay Like This Forever?
Despite the apparent opposite movements of BTC vs altcoins but I believe they always move in the same direction against USD (if we are talking about 1-2 months or longer movement). Ethereum, BCH, LTC, all have been going up vs US Dollar from early 2019 despite their overall movements against BTC have been consistently going lower.
And, while I believe this current trend might last for awhile, but it won’t last forever. I think there will be times when BTC pumps slowly while altcoins pumps way higher against US Dollar. However, it’s a question of ‘when’ and not a question of ‘if’.
The great thing about cryptocurrency market is that people often believe in the same predictions and thus they create self-fulfilling prophecies. Many crypto traders believe bitcoin’s 2020 halving will trigger huge bull run in 2021 or 2022 or even in 2020 itself. Whether what they say will become reality or not is something we don’t know yet. However, if enough traders believe in the same thing, they might become the actual ‘trigger’ to bitcoin price action.
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