Bitcoin is stealing the spotlight once again and it could be a threat for the altcoin market. As BTC approaches another ATH, there will be many investors pulling their money out of altcoins to jump onboard. This is the opposite of an altcoin season.
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DonAlt on Bitcoin
The pseudonymous analyst DonAlt had a piece on TechnicalRoundup newsletter explaining how and why this could happen.
According to him, Bitcoin is only in the middle of a strong rally and reaching new all-time highs are very likely. Furthermore, the Latest Bitcoin exchange-traded fund was not an “sell the news” event.
“Overall, our view is that new all-time highs are likely…” said DonAlt.
Naturally, the rapid growth can motivate almost everyone to invest into BTC. In that regard, opening positions on altcoins is currently not wise. Eventually, the altcoin market will bleed out capital as everyone rushes to buy the king of all digital assets.
“First, if Bitcoin breaks out, we expect a puke in altcoins as holders sell them to catch the move. This will likely cause a liquidation cascade in the short term and set up a really nice mean reversion play for when the Bitcoin breakout stops printing [green candles].”
In this case, according to DonAlt, it could be a good strategy to buy the dip for wounded altcoins. In terms of timing, we should all wait for the Bitcoin rally to stop before touching the subordinates. He did not state whether the end of this bullish phase would lead to altcoin season.
“To summarize, we don’t like altcoins as long as the majors look like they’re going to print big candles (hopefully green ones) at any moment. If they do, altcoins will become attractive either on a post-liquidation bounce basis, or on a larger rotational basis once the dust has settled.”
The Best Strategy
The DonAlt analysis sounds very solid and likely. We can already see as BTC is experiencing massive surges, altcoins are not following accordingly. On the other hand, if the dominant cryptocurrency is making huge waves in the market, it will bleed the others.
We should follow the market closely and look for possible signs. As of now, everything is about BTC.
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