Altcoin prices appear to be dropping after Bitcoin reached past $49,000 yesterday. Indeed, out of roughly 96 DeFi assets listed on Messari, only 10 showed positive movement over the last 24 hours. Why is this?
According to a report from CoinTelegraph, the Bitcoin rally that took place over the weekend may be partially responsible. When Bitcoin hit past $49,000, the rally may have been partially pushed by investors who pulled out of altcoin markets in favor of BTC; notably, the price of ETH also fell as Bitcoin pushed forward.
Money is flowing out of alts….
I think it’s about to go in to bitcoin. pic.twitter.com/ELQbx25lSU
— Altcoin Psycho (@AltcoinPsycho) February 14, 2021
What’s next? According to CoinTelegraph, Bitcoin’s next moves could have big implications for what happens with altcoins. If BTC goes up and then consolidates, altcoins could see short-term benefits: “altcoins tend to surge when BTC is consolidating after an initial impulse rally,” the publication said.
“However, when BTC is rallying or seeing a slight pullback, altcoins often see large price drops against both BTC and the U.S. dollar,” the publication said–and it seems as though BTC could be poised for a rally.
Even With Pullbacks, the Altcoin Market Cap is Skyrocketing
Buying pressure on Bitcoin briefly fell in the hours of Monday, February 15th. However, as buying pressure appears to be picking up again, altcoins could be poised for further short-term drops.
However, the drops appear to be a healthy part of a longer-term cycle of capital flowing into altcoin markets. Crypto YouTuber Quentin Francois, also known as “Young and Investing,” pointed out on Twitter on Friday that the altcoin market cap had “now broke its previous ATH (sic),” a move that he said was “perfectly following the path.”
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“When this happened last cycle, the altcoin market cap went up with 320,000%,” he wrote.
— Young And Investing (@QuintenFrancois) February 12, 2021
Pseudonymous trader @RektCapital also wrote on Twitter that “at this early stage in the Altcoin market cycle, any major pullback would by no means be a bearish event. In fact, any pullback would enable future uptrends in an otherwise strong and healthy growth cycle.”
“We often talk about how prices don’t move up in one straight line, but it’s hard to make that assertion for Altcoin Market Cap’s performance throughout 2021. Altcoin Market Cap has literally been moving up in a straight line for weeks and weeks,” the trader wrote.
We often talk about how prices don’t move up in one straight line
But it’s hard to make that assertion for Altcoin Market Cap’s performance throughout 2021
— Rekt Capital (@rektcapital) February 14, 2021
And indeed, even though altcoin markets may have taken a beating over the weekend, prices already appeared to be on the road to recovery. Over the last 24 hours, the total altcoin market cap fell as low as $525 billion, down from $595 billion. At press time, the total altcoin market cap had risen to $565 billion.