This time it's different?
Famous last words uttered by traders right before it turned out not to be different at all.
What is different you might be wondering?
Well, the fiat fund flows into crypto are different, that is what.
In the past you would often seen bitcoin rally first and then once bitcoin would start to reach overbought conditions or brush up against some major resistance level, you would see money start to flow out of bitcoin and into other coins.
In fact you can clearly see evidence of that related to Ether.
Take a look at this chart of Ether/BTC:
(Source: https://www.coindesk.com/bitcoin-bull-trap-not-says-lesser-known-price-indicator/)
As you can see, bitcoin clearly lead ether in December when bitcoin ran up to make new all time highs.
Then a few weeks later, ether followed suit and made all time highs.
Looking very much like money rotated out of bitcoin and into other altcoins.
Things are different this time around:
What is interesting right now is that trend from last year no longer seems to be the case.
In fact, take a look at the second part of this chart:
(Source: https://www.coindesk.com/bitcoin-bull-trap-not-says-lesser-known-price-indicator/)
You will see that now bitcoin and ether are moving basically in lock step with each other.
A rising tide lifting all boats?
Is this a good thing or a bad thing?
Well, in my opinion it probably means that if bitcoin were to breakout of it's recent doll drums there is a chance that it starts pulling money from altcoins again.
A phenomenon I like to lovingly refer to as the "bitcoin suck".
We saw it happen a few times in the middle of 2017.
It basically means that as bitcoin goes higher it starts to pull funds from other coins to further fuel it's rally, the net effect is soaring bitcoin prices and bleeding altcoin prices.
There is no guarantee this happens again, but in my opinion the current setup is looking like that might be the case to me.
Once bitcoin gets that catalyst to start it's next run, it may indeed be at the expense of many of the altcoins.
Or perhaps, they can all go up together in a beautiful symbiotic relationship. :)
Plan accordingly.
Stay informed my friends.
Follow me: @jrcornel
BTC is the entry point for all crypto. So until we have legit Fiat pairs we will always be subject to the movements of BTC.
Definitely. We also need more pairs for SBD. Right now its only major pair is Steem.
This time is different, we will moon for real.
all cryptos will be correlated in prices since this is the starts of the age of the new version of the internet, we will see altcoins and cryptos doing business commercially, with the ongoing regulation this will open the door to institutionalized investors.
I hope some of that institutional money comes to Steem. Then we'd be laughing about the day we were excited about it hitting $3!
No sure I am a fan of the Bitcoin Suck 🤪
But good information to keep me informed. STEEM ON @jcornel 👍
Looks like the market kind of bottomed , and we now going up crazy fast.
The next bubble starting to grow, with the inpatient of the previous bubble to get rich fast.
Will be interesting this season :)
One thing to consider is all the new exchanges offering USD pairing. That could be one of the reason that other cryptos are disintegrating from bitcoin. We won't see much correlation from last year in my opinion. We are in the next phase of crypto life cycle.
Yes that is a great point. There basically was no other fiat on ramps to any coin besides bitcoin until late last year. Thanks for the reminder!
Now if we can only get some good pairs for SBD! Then it wouldn't be so tied to the price of Steem!
Good analysis... I think the alt-coin bleed "bitcoin suck" is a result of over-popularity and positive speculation in bitcoin. People were buying bitcoin that had no idea what they were doing; while crypto enthusiasts started using bitcoin as a crypto cash-out at the same time.
Is it possible a different coin will be the crypto-cash-out on the next alt-coin bleed; like say Ripple or Ethereum? It has to be something the media will hype, and the enthusiasts only care about because it set some standard....
Good points. Whatever coin it is, it will have to be one with many fiat off ramps.
Ooo yeh, forgot that point... "off ramps" can't be a "suck" currency without that.
Yes, planning is really important when we stand on the volatile boat, and your opinionated post is really important because we need opinions of experienced analysts who can explain in and out of the situations because lot of people don't know about market conditions or don't know how to read charts but when people get charts plus explanation then they will get some idea. And yes, in my opinion also possibly the Altcoins going to move to push the prices of Bitcoin. Thanks for sharing this informative post with us and keep doing the great work. Wishing you an great day and stay blessed. 🙂
I am hopeful that they can continue to move up together, but I have a feeling that won't last very long. Here's to hoping though!
Yes, let's hope for the best.
Yup im one of those who is learning to read charts . Read the article, i do not even know what resistance is LOL AT ME. I need help or i need to stop trading hours for money and start learning.
I think certain Alt Coins are going to flip Core Bitcoin this year with the ratio. I know a lot of people that hold Bitcoin (including myself) don't wanna hear this but its something to consider. Just look at how fast EOS is rising and its core functionality. 100K tps, governance, easy of use, dapps lining up to use it. ETH inflation is dropping to 90% with the upcoming Casper upgrade. The hybrid version is ready. It very possible ETH makes a massive run ahead of the new upgrades and as dapp explode with adoption on main net. Maybe I am wrong? I guess this year we'll find out.
Very good points. I think the current environment could last for some time, at least until bitcoin gets a real catalyst or some regulatory agency scares people out of altcoins and back into bitcoin saying they are all securities (again).
I think previously, the only way to buy Alts has been to use fiat to buy btc, then move btc to an exchange that sells Alts and exchange there.
More recently though, alt exchanges have started to accept fiat deposits, so we may start to see decoupling between cryptos!