The big news today is that bitcoin is just shy of hitting the $11,000 mark, but now that the world’s number cryptocurrency by market cap is on a fresh high, many altcoins are beginning to retrace their steps and fall to lower numbers.
Altcoins Are Hitting Fresh Lows as BTC Rises
At the time of writing, several of the crypto space’s leading altcoins are up against the U.S. dollar, but down when compared with bitcoin. Ripple (XRP), for example, is the world’s third-largest cryptocurrency by market cap. The asset gained more than three percent over the preceding week, but is now down by approximately six percent, while Chainlink (LINK) is down roughly four percent in the past day alone.
This has been seen before. When bitcoin does well, other altcoins simply don’t have the energy or the space to compete. When bitcoin is struggling or is not as volatile as traders are used to, they can often dominate the crypto industry, as they were doing during the previous two weeks.
Mohit Sorout – founding partner of Bitazu Capital – explained in an interview:
Most altcoin cycles are centered around bitcoin volatility. When it dries up, no one wants to trade BTC. This leads to a large uptick in speculation on alts, driving their prices up – typically alts with strong narratives and large-scale memetic behavior get the most volumes.
Cryptocurrency author and writer Nik Patel recently stated that he believes bitcoin is likely to continue its market dominance over the remaining months of 2020. He also believes the currency could manage to hit its all-time high again of roughly $20,000 by the time the year is complete. He explains:
Wouldn’t surprise me to see dominance now rise until BTC all-time highs (pending a confirmed weekly breakout above $10,600) break $20K and alts find another bottom (like November/ December 2016) as they rally concurrently like March-June 2017.
The past few weeks have been quite supportive of bitcoin. For one thing, traders everywhere received news that the presence of institutional players has grown heavily over time, with platforms like Grayscale reporting investments of more than $1 billion for just its second quarter alone. That means more than $300 million was invested in BTC each month for roughly three months.
In addition, the Fed has announced that it is looking to approve more stimulus checks for Americans affected by the coronavirus, and banks are now permitted to provide crypto customers with custody services, thereby bridging the gap between centralized and decentralized finance.
More Dominance to Come?
Bloomberg analyst Mike McGlone writes:
Too much supply and ease of entry should continue to weigh on most altcoins, still in an extended hangover from the parabolic gains to the 2017-18 peak. It’s the increasing differentiation, maturation and more widespread adoption that favors bitcoin, which is becoming more of a gold-like store of value.