On Tuesday, the market’s leading cryptocurrency, Bitcoin (BTC), experienced a notable decline, dropping toward the $89,000 mark, its lowest price in seven months, resulting in over $1 billion in liquidations across the crypto market within the past 24 hours.
However, despite this downturn, altcoins have exhibited significant stability when compared to the performance of BTC. Analysts from the Bull Theory have provided insights into why altcoins are holding strong during this period.
Bitcoin Dominance Falls
In a recent social media post on social media site X (previously Twitter), the analysts asserted that the recent decline in BTC’s value was not characterized by typical selling pressure; instead, it is seen as a result of structured institutional selling.
This was reflected in negative flows from Coinbase and the manner in which the candlestick patterns formed. Following this structured selling, panic selling ensued as traders who were already facing losses began to exit their positions hastily.
Related Reading
This panic selling led to rapid declines in BTC’s price; however, altcoins, having already approached a state of seller exhaustion, did not experience significant drops.
In previous scenarios where BTC has faced downturns, its dominance in the market typically surges as traders flock to Bitcoin for safety. Yet, the current situation is different.
Bitcoin’s dominance remains below the 50-week Exponential Moving Average (EMA), and the market has recently seen a series of red candles. Such a decline in dominance while BTC is in a downward spiral is unusual, suggesting that altcoins are not being entirely abandoned by traders.
Ethereum (ETH) has lost its 50-week EMA but is making attempts to reclaim it. Throughout this month, BTC and ETH have experienced nearly identical declines, yet ETH has shown quicker recovery patterns.
The analysts highlighted that during previous cycles, whenever Ethereum holds its ground better than Bitcoin during similar downturns, altcoins tend to demonstrate strength as well.
Altcoins Show Strength Amid BTC’s Decline
The Bull Theory analysts also noted that many altcoin pairs against BTC have rebounded to levels seen before the significant crash that occurred on October 10th, with some even trading above those thresholds.
This, according to their analysis, indicates a few key points: altcoins are outperforming BTC, the current pressure feels isolated rather than widespread, and the sell-off lacks broader implications across the market.
Related Reading
The Analysts suggest that this combination of factors is one of the strongest signals of a market bottom. When BTC is experiencing a downturn, dominance is declining, and alt/BTC pairs are on the rise, it often points to a capitulation phase for altcoins.
As of this writing, Bitcoin has recovered above the $93,000 mark. However, the leading cryptocurrency has erased all of its year-to-date gains, while extending the gap to record levels by 26%.
Featured image from DALL-E, chart from TradingView.com
Credit: Source link