As Bitcoin consolidates and enters a sideways movement, altcoins are becoming more attractive to investors.
The crypto market’s climb during the week continued over the weekend, with the majority of the top 100 altcoins posting double-digit gains.
The fact that Bitcoin (BTC) initially moved sideways, combined with the upcoming Corona relief payments for the American people, has likely ensured that the market continues to move higher today.
Market visualisation from Coin360
Although the massive capital inflows from major bitcoin investors to South Korean crypto exchanges are worrying, the positive fundamentals are providing optimism for the most part. The good framework conditions for crypto miners and the ever-decreasing supply are two decisive factors that will probably continue to drive the price upwards.
Some experts, meanwhile, believe that Bitcoin’s current surge Bitcoin Code is partly due to falling demand for gold, as the crypto market leader seems to be increasingly becoming the value hedge of choice, especially among younger people.
Bitcoin consolidates, goes sideways
After Bitcoin (BTC) reached a new record high of 41,940 US dollars on 8 January, the price is currently seemingly entering a sideways movement. After the bulls were able to establish the psychologically important 40,000 US dollar mark as support, they will next try to push further upwards.
Bitcoin hourly chart. Source: TradingView.com
At the time of writing, Bitcoin is up 1.53% for the day, giving it a price level of US$40,690. Meanwhile, trading volume over the last 24 hours is down 26%, though this is hardly surprising given that a record high was also recorded for this on 8 January.Since the bitcoin price no longer has a known ceiling on the upside, it is all the more difficult to forecast further price movement. Chad Steinglass, the head of trading at CrossTower, warns that increased volatility (price volatility) could become the new normal until the market rebalances and stabilises.
Speaking to Cointelegraph, Steinglass explains to this effect:
„I believe we have entered a phase where daily swings of US$1,000 are completely normal. The existing liquidity of the market makers is getting smaller and smaller compared to the size of the new big investors. The market makers can therefore no longer take out as much risk for the market, which is why I expect to see further rapid price swings.“
Is it the altcoins‘ turn now?
As in previous uptrends, after Bitcoin climbs, a sideways movement occurs. During this phase, many crypto traders then look to altcoins, often carrying partial gains from Bitcoin into smaller cryptocurrencies.
Jean Baptiste Pavageau, one of the owners of ExoAlpha, expects this to happen again in the current record run. Thus, he thinks that Bitcoin’s upward momentum will sooner or later fade, after which investors will then switch to altcoins:
„In the last two weeks, we have already seen such a redistribution, with Bitcoin investors booking out their partial profits to invest in other cryptocurrencies. Bitcoin’s potential return ratio is slowly getting smaller, which is why altcoins are becoming more attractive to those investors and investors looking for high profits. I expect Bitcoin’s market share to decline again and altcoins to boom in the coming weeks.“
Bitcoin daily chart. Source: Coin360
Ether (ETH) is already benefiting from this trend, with the price of the second-largest cryptocurrency posting a daily gain of 4.2%, resulting in a value of $1,267. In turn, Bitcoin offshoots Bitcoin Cash (BCH) and Bitcoin SV (BSV) are up a whopping 23.6% and 61% respectively.
There was also encouraging news for stablecoins this week, which probably helped the crypto project MakerDAO and its cryptocurrency MKR, which in turn is closely related to the company’s own stablecoin DAI, to achieve a 45% increase in the last few hours. As a result, the MKR price has risen to US$1,530.
The total market capitalisation of the crypto market currently stands at 1.1 trillion US dollars. The total market capitalisation of the crypto market currently amounts to 1.1 trillion US dollars, with Bitcoin accounting for 69% of the market.