Bitcoin’s price action has been overshadowed by the intense uptrends seen by many altcoins throughout the past few weeks.
The benchmark cryptocurrency’s recent stability has provided an ideal backdrop for smaller crypto tokens to rally against, with investors draining BTC’s trading volume and liquidity as they shift their focus onto altcoins.
This trend may not last for too much longer, as Bitcoin is now flashing some signs of strength.
One analyst believes that the major digital assets – like Bitcoin and Ethereum – will “drain” the gains seen by altcoins once their uptrends start picking up steam.
This could mean that the bullish altcoin market is in jeopardy of falling into a near-term downtrend.
Bitcoin and Ethereum Show Signs of Strength, But Altcoins Remain Quiet
Over the past 24-hours, the cryptocurrency market has seen a shift in the dynamics between the major digital assets and the smaller ones.
Throughout the past couple of weeks, altcoins have been posting intense gains on a daily basis while Bitcoin and Ethereum both remained caught within a prolonged bout of sideways trading.
This consolidation was perpetuated by an exodus of traders, who all shifted their capital and attention away from BTC and ETH in favor of smaller, more volatile, assets.
Yesterday, however, the two largest cryptocurrencies incurred notable upswings that came about suddenly, with Bitcoin hitting highs of $9,600 while Ethereum rallied to $270.
Altcoins did not mirror this momentum, and many actually declined concurrently.
This suggests that there could be an inverse correlation between Bitcoin and smaller altcoins.
If this is the case, then it is imperative that Bitcoin remains caught within its macro trading range between $9,000 and $10,000 in order for the uptrends seen by many smaller tokens to extend further.
Here’s How BTC Could “Drain” Altcoins
One respected trader recently mused the possibility that altcoins won’t be able to post positive price action while Bitcoin and Ethereum trend higher.
In a tweet from yesterday, he explained that he believes altcoins will see their BTC trading pairs plunge in value while the benchmark cryptocurrency pushes up towards its high time frame resistance at $10,500.
“If BTC and ETH start trending. I’d be cautious on longing alts. Especially if this is the start of a new BTC trend upwards. The most likely outcome would be alt/btc pair ratios getting drained while BTC moved past 10.5k in that scenario. I also wouldn’t look to fade 1st move,” he said.
Bitcoin still has a long journey ahead before it is able to break above $10,000, however, as the upper-$9,000 region has been laced with heavy resistance.
Despite seeing some strength yesterday, it also remains unclear as to whether or not this latest movement is truly emblematic of a shifting trend.
Featured image from Unsplash. Pricing data from TradingView.
Credit: Source link