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Altcoin traders and investors should seek cover if Bitcoin (BTC) experiences significant price declines.
So thinks Filbfilb, independent market analyst and co-founder of the Decentrader trading suite. In a tweet posted on Friday evening, the pseudonymous entity said that a 30% crash in the Bitcoin market could cause altcoins to drop twice as much.
When Bitcoin consolidated between $ 50,000 and $ 60,000 during the March-May period, altcoins exploded. Likewise, the recent Bitcoin market correction, which saw the flagship cryptocurrency drop from around $ 65,000 to as low as $ 28,000, also caused altcoins to crash; still, at the levels they held as support when Bitcoin was stuck in the $ 50,000 to $ 60,000 range.
Bitcoin price relative to the altcoin market cap. Source: TradingView, Filbfilb
Filbfilb noted that altcoins face a so-called “catch-up risk,” hinting that even a small downward shift in the Bitcoin market could push altcoins down to twice as low. The statement emerged as Bitcoin prices plunged to $ 30,173 after a 15.58% downward correction since the start of the week.
“[Altcoins], therefore, carries much more downside risk than Bitcoin with [BTC/USD] menacing stockings, ”Filbfilb tweeted. “If bitcoin fell lower, losing another 30% in the worst case scenario, I [altcoins] correct to do twice as bad from here. “
“If bitcoin fell lower, losing another 30% of the worst case scenario, I would expect the alts to correct to do 2 times worse from here.”
Bitcoin’s declines in May and June brought its year-to-date performance down to 5.71%. Meanwhile, as top-cap altcoins tumbled in tandem, their YTD yields fared much better.
For example, Ether (ETH), the second largest cryptocurrency, fell just over 60% from its mid-April peak of $ 4,384. Nonetheless, its YTD returns stood at 141% at the time of publication. Likewise, Dogecoin’s YTD profit was 4.112% even after falling almost 80% from its all-time high of $ 0.76.
Bitcoin YTD vs YTD altcoins in 2021. Source: Messari
So it seems that altcoins offered their holders better profit opportunities than Bitcoin. As a result, investors could compensate for their losses in the Bitcoin market by simply selling their profits in altcoin for fiat and / or by transferring the funds back to BTC.
Bitcoin and $ 20,000
Lately, Bitcoin has been able to avoid a deeper pullback below $ 30,000 despite repeated attempts.
Bitcoin consolidation continues in the $ 30,000-40,000 area. Source: TradingView.com
Many analysts, including Mercuryo founder Alexander Vasiliev, see Bitcoin’s bullish resilience as a signal that it would eventually surpass $ 40,000 and reach its previous high levels, near $ 64,000, in the medium to long term. .
However, some analysts who were previously bullish on Bitcoin have reversed their bias following the cryptocurrency’s latest bearish correction.
For example, Scott Minerd, the chief investment officer of multi-billion dollar investment firm Guggenheim Partners, told CNBC on Friday that he expects Bitcoin to drop to $ 15,000.
In February, as Bitcoin tore through resistance of $ 30,000, Minerd predicted that its price would hit $ 600,000.
Clem Chambers, managing director of financial analysis website ADVFN.com, also reversed the downtrend for Bitcoin, noting that Bitcoin could fall back to $ 20,000 due to sentiment of capitulation. He wrote in his SeekingAlpha article:
“The next step appears to be here, and it will be the last big downward movement leading to a repeat of the crypto winter we have endured before.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move comes with risk, you should do your own research before making a decision.
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