Market Too Big – Altcoin Pressure on Bitcoin continuesAugust 31, 2019
In the second part of August 2019, a new crypto market term came about: altcoin annihilation. This showcases the trend of altcoins, including those in the top 10 list of the cryptocurrencies by market cap, being sold off en masse. The selling pressure and the general negative sentiment towards them dragged bitcoin down as well.
Now, BTC price is hovering above the $9,000 mark but chances for a break above $10,000 seem as big as the possibility of the token price sliding down into the $8,000 range or even lower. As the altcoins continue their freefall, some analysts believe that the same process will not keep crypto and especially bitcoin down for long.
Once the initial turbulence abates a bit, the clear bull market outlook should be back in the driving seat. The selloff needs to cool down, there is no doubt about that, but once it does, the BTC price will move back into the green. Yet, in a world where small rumors can shake any digital domain, from esports to crypto, to its core, many are hesitant about backing this sentiment. With so much money in the game, the issue of the negative impact of altcoins is currently hot on everyone’s’ minds.
Bull Run Pressure
During the previous week, ethereum, litecoin, and EOS all dropped substantially in the USD value. This dragged bitcoin as well to below $10,000. The same caused a big shock to the bullish investors, many of whom saw the $10,000 mark as something that was a definite sign that the crypto winter has been broken.
For many, this is direct proof that the fact that fear and negativity around altcoins would be able to hurt bitcoin. This is strongly held position in the community even though many see bitcoin on the rails heading to a full-blown bull market that will eventually set a new record. This means hitting through the $20,000 that was established in 2017.
In the previous fluctuations during the last two months, many saw this as the grinding of the support from the breakouts that would follow in the autumn of 2019. However, there is some pressure now on the same outlook being that bitcoin is struggling to reclaim the mark above $10,000. This is why all eyes are on the moment when the selloff begins to stall and the price – in whatever range that might be – stabilizes itself.
Bitcoin Wild Targets
The optimistic narrative is that the current correction will be another step in building support that will provide a solid foundation for the next big – potentially biggest so far – bull run. Respected analysts and their models differ on the targets of this run, but many see the price of a single BTC hitting the range of over $50,000 in the next year or so.
For all of them, May of 2020 is an important date because this is when the next halving of the bitcoin network will take place. Each halving cuts the reward of the BTC tokens that the miners get – more precisely, it takes it down by 50 percent. This always throws off the supply and cause the price to jump up. Crypto investors all know this so they might be inclined to use it as a signal to rush and buy-in before the dramatic rise in the value.
In that environment, the potential for breaking over the old record of $20,000 is highly likely. Will it see the price rise up to $60,000? No one can say for sure, but the possibility of $30,000 is definitely on the table. In that case, the spike in value will still be more than astronomic.
Best-performing Asset of all Time
All of this underlines the narrative that many crypto evangelists push so often – bitcoin is the best-performing asset of all time. Its ROI easily beats gold, stock and anything else that was used as an investment target. Altcoins, however, are not in the same boat, even the major ones like ethereum. Some experts believe that they might never reach their previous highs, regardless of whether or not bitcoin is $10,000 or $100,000.
This might sound strange at first, but there is a solid logic behind it and the markets of recent months showcase a similar trend of the great uncoupling. Previously, ethereum had a clear tendency to follow bitcoin close behind with almost any price correction. This slowed down a bit in the 2019 bull run and it became more erratic in the months of this year’s summer.
Now, a very similar pattern can be noticed among other altcoins and this is a bad sign for them – even with a surging BTC, they could be left well behind and in low price range. After all, if this show had its main character, it would be without any doubt bitcoin. Everyone else is a supporting character and that should be a cause for worry for all in the bitcoin community.
While the altcoin price is dropping, many are wondering if the market simply too big for all of these cryptocurrencies? The short answer is no, it is not. There is a range of issues where the choice between bitcoin and some altcoin does not boil down to simple price and market caps. Ethereum, in particular, was made and defined as a tech solution for numerous blockchain applications that utilized the token to build their own version of digital assets. The same goes for the infrastructure needed to support their existence.
Saying that altcoins will vanish like all the funds from the crypto market trickle down into a surging bitcoin is not a realistic scenario. While it could be argued that small altcoins will go through this, no one would be wise to claim that ripple, ethereum or litecoin could expect the same fate. All of these tokens have their own big and very dedicated communities. The same communities will keep the light burning even if the price drops even more dramatically than it is doing now.