Crypto

Why Bitcoin’s Next Breakout May Not Be a Seasonal Signal for Altcoins

Compare

Tweeter

Compare

Compare

Email

On April 14, Bitcoin (BTC) hit an all-time high of $ 64,900 after posting a 124.5% gain in 2021. However, a 27.5% correction followed over the next eleven days, marking a local low of $ 47,000.

The popular Crypto Fear and Greed Index hit a 12-month low on April 25, indicating that investors were closer to “extreme fear,” which was a complete reversal of the level of “extreme greed” seen during the bitcoin rally above $ 60,000. …

This April 14-25 downtrend wiped out the $ 200 billion altcoin market capitalization. However, the rally that followed could serve as a guide as to what to expect when Bitcoin finally manages to break out of the $ 40,000 level.

Bitcoin Price in USD, Coinbase. Source: TradingView

Altcoins showed a similar trend, hitting the $ 850 billion mark on April 22, but fully recovering to a record $ 1.34 trillion on May 10. There is no guarantee that this pattern will repeat itself, but there is no better source of information than the recent market itself.

Altcoin market capitalization in billions of dollars. Source: TradingView

The cheapest is not always the best

Many investors believe that altcoins are consistently outperforming bitcoin prices, but is that absolutely true?

While it was 2021, Bitcoin was the big winner in the last quarter of 2020 as it outperformed the market as a whole by 110%. However, an analysis of the winners of the bull run at the end of April could provide some interesting insights into what to expect from the next rally.

Best altcoin performance from April 22nd to May 9th. Source: CoinCodex

Among the top 100 tokens, Ether Classic (ETC), Polygon (MATIC), Waves and Fantom (FTM) were the biggest winners. Scalable solutions or smart contract platforms were the winners, and industry leader Ether (ETH) also outperformed the market.

Coins below $ 1 showed the worst 80% of the performance, which is exactly the opposite of what the average investor would expect. There is a long-standing myth that cheap par value altcoins will stand out in the altcoin rally, but this is clearly not the case.

The worst performing 100 best altcoins from April 22 to May 9. Source: CoinCodex

The market cannot be synchronized

Unfortunately, it is impossible to predict when the current retracement will end, and historically altcoins do not usually stand out during a downtrend. This means that calling the first sign of a recovery in bitcoin prices “alternate season” is an imprecise strategy that could lead to financial ruin.

The general rule of thumb for starting an “alternate season” is two to three consecutive days of cumulative gains of 30% or more in cryptocurrencies with little or no development, including Dogecoin (DOGE), Litecoin (LTC), and Ether. Classic (ETC).

The views and opinions expressed here are those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move carries a risk. Before making a decision, you should do your own research.

Back to top button