The crypto market has rebounded sharply from the mid-March lows, but the altcoin market activity in recent days suggests that altcoins could be in for a brutal correction soon.
Despite desperate hopes for an altseason, one analyst thinks altcoins are likely headed lower than anyone could have imagined, as bitcoin’s dominance grows from strength to strength.
Growing Bitcoin Dominance Clobbering The Altcoin Market
Bitcoin’s dominance has been on a steady uptrend for the better part of this year. BTC’s dominance currently sits at 68.66%, according to data provided by Messari.
This indicates that investors are pulling out their money from altcoins and allocating it to BTC instead. This trend can be seen with long-term investors like Quantum Economics’ Mati Greenspan who recently allocated 100% of his portfolio to bitcoin. Moreover, Wall Street hedge fund managers are foraying into the crypto markets with pure BTC investments.
Also, when you look at the altcoin prices measured against bitcoin, you will notice that most of the altcoin prices are plummeting against the benchmark cryptocurrency.
Analyst Pentoshi Drops The Mic: Altcoins Could Capitulate Soon
An analyst going by the moniker Pentoshi noted in a tweet that a capitulation could be on the cards for altcoins. Based on his charts, it appears that ETH may be headed for levels not seen since 2016.
In essence, the analyst believes the worst is yet to come for altcoins including Ripple’s XRP and Litecoin (LTC) as the prices nosedive. He, however, believes such a scenario could later provide altcoin investors with great opportunities.
$ETH Eth heading for levels not seen since 2016. $LTC trading below 2014-2016 prices $XRP heading for levels from 2014, 2016, and 2017 The alt market looks like it could capitulate soon. Seems like the worst is yet to come but afterwards should provide huge opportunities pic.twitter.com/9IUGqDXnZd — Pentoshi (@Pentosh1) May 14, 2020
Will BTC Give Way To An Altcoin season?
Many traders raked in handsome profits during the 2017 bull market as the prices of the altcoins experienced exponential growth in value. Ripple’s XRP, for instance, surged more than 1,000,000% as it peaked above $3 later in January 2018.
Investors have since been holding out for a similar rampaging altcoin rally, without any coming forth. That’s not to say that altcoins are doomed. The ones with solid utility and a staunch community will likely stay strong until the next major rally. Moreover, bitcoin forging ahead as altcoins slump could create the optimum setup for an altcoin rally.
However, a full-blown altseason is highly unlikely until BTC registers a new all-time high and attracts new investors. As analyst Salsa Tekila put it nicely:
“I hope $BTC keeps mooning while $ALTS capitulate in the next few months because that would be the perfect conditions for altseason. If bitcoin breaches ATH media coverage will give crypto a lot of visibility and retail newcomers just love owning 10 gazillions XRP over 1 BTC…”