Crypto Traders Shift to Altcoins as Bitcoin Remains Range Bound
The overall bullishness in the crypto market, seen earlier this week, has carried forward to the weekend as a major portion of the top 100 cryptos listed on Coingecko and CoinMarketCap have recorded double-digit gains. Notably, Bitcoin (BTC) seems to have entered into a short-term consolidation around $40,000 level and the likelihood of a third round of aid checks for the US citizens are two major reasons for prevailing bullishness.
Even though there are worries about huge inflows of Bitcoins, primarily from whales or large holders, into cryptocurrency exchanges in South Korea, fundamentals such as declining supply and miner sentiment keeps investors a bit optimistic about the prospects of further uptrend in price.
An increasing number of analysts have cautioned that Bitcoin’s latest price rally is primarily due to the exit of money from gold as the numero uno crypto is fast turning out to be the preferred asset of millennial to hedge inflation.
Soon after Bitcoin (BTC) hit an all-time high price of $41,940 two days back, the king of crypto seems to have entered in to a short-term price consolidation phase as bulls continue to provide support at psychological level of $40,000.
At the time of writing this article, Bitcoin was trading at $40,527, reflecting a gain of 2% in the last 24 hours. Interestingly, the daily trading volume has recorded a 26% decline from the peak established on January 8.
Forecasting the trend is not easy at these price levels as there is no proven support and resistance levels. With respect to price volatility, Chad Steinglass, the chief of trading at CrossTower indicated that an increase in volatility could become a standard until the crypto market starts stabilizing through “balanced flows”.
Steinglass further opined:
“I think we’re entering a stage in the markets where $1,000 intraday swings are pretty much going to be normal… Market maker liquidity relative to big player size is getting smaller and smaller. With market makers having reduced capacity to warehouse risk relative to trading flow, I expect prices to move pretty quickly.”
As the history of earlier bull markets indicate, an increase in the price of Bitcoin is usually followed by consolidation. During this period, traders move to altcoins using the profits generated from Bitcoin. As per Jean Baptiste Pavageau, an associate of ExoAlpha, the prevailing bullishness in Bitcoin is expected to ultimately ease and investors will slowly start accumulating altcoins.
“Indeed, we have started to observe a classic “wealth” distribution pattern over the past 2 weeks, where Bitcoin investors are looking to take their profit and invest in other blue-chip coins. While the upside on Bitcoin is decreasing, the altcoin market is becoming more appealing for traders and investors who are looking for large returns. We expect to see Bitcoin dominance starting to decrease and the altcoin market booming over the next few weeks.”
In the meanwhile, Ether (ETH), native crypto of Ethereum blockchain continues to record new yearly highs as the price gained 10.9% to $1, 326. Similarly, Bictoin Cash (BCH) has rallied 43.3% to trade at $606.22. Also Bitcoin SV (BSV) has gained 59.3% to trade at $284.60.
Overall, the week recorded a flurry of positive developments with respect to stablecoin ventures. MakerDAO and its native token MKR, which governs the technical advancement of DAI stablecoin, has recorded a rise of 45% in the last 24 hours and trades at about $1,530.
The aggregate cryptocurrency market cap is currently $1.116 trillion, with Bitcoin commanding dominance of 67.5%