The Bitcoin price broke the $13,000 resistance level just a week ago, which means that those waiting for Ethereum and altcoin prices to rise may have to wait a few months.
Bitcoin (BTC) is absorbing the volume of the entire cryptcoin market as its price continues to rise. This is causing the market for alternative crypt coins (altcoins) to shrink, which has seen increased selling pressure and low demand from buyers.
On October 30, Santiment researchers noted the growing volume and dominance of Bitcoin, while Chainlink (LINK), Ether (ETH) and Binance Coin (BNB) were having problems. They wrote:
„The dominance involving #Bitcoin continues to show, particularly through the volume of trade. When comparing other major block chains in the last day, note the decrease in trading volume of $ETH, $XRP, $LINK and $BNB, whilst BTC levels remained high“.
At least in the near future, traders believe that the so-called „altseason“ will not return, especially as Bitcoin has better performance than altcoins.
When will the altcoins recover?
Historically, during the bull markets, the cryptcoin market first saw Bitcoin experience a rapid upward trend. Then altcoins followed, after BTC reached a local peak or historical high.
Traders expect a similar pattern in the current price cycle, generally expecting altcoins to recover in 2021. But until the BTC stabilises and completes its rebound, traders do not see an adequate upward trend for altcoins.
From the September 13 lows, the Bitcoin domain index rose from 56% to 63.4%, registering a 7.4% increase in two months.
However, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said that we may see a season of altcoins in the first quarter of 2021. He said:
„The dominance hit the red zone here. I am still waiting until December for a higher structure in this. After that -> Altseason in the first quarter“.
The problem with the altcoins is the current dynamics of the Crypto Code market. When Bitcoin increases rapidly, altcoins fall as capital returns to BTC. If BTC falls, the altcoins fall as a whole, putting the altcoins in a precarious position.
A pseudonymous trader known as „DonAlt“ said that he has been shorting Ether for several days. He said that if ETH doesn’t recover against Bitcoin, then a wider reversal of the altcoin market is possible. The trader pointed out:
„I have been shorting ETH for a couple of days. That said, ETHBTC is getting closer to support. So there is a good chance it will bounce back here, if it doesn’t, the whole altcoin market will fall quite aggressively“.
Similarly, a trader known as „CryptoCapo“ said that the technical structure of altcoins is not convincing in the short term. For traders, that makes Bitcoin more attractive, as it has shown strong momentum throughout October. He emphasized:
„Let’s be honest: there are alts that look really bad, alts that look decent and alts that look good. I don’t see any alts that look really good at the moment. You have to choose wisely.“
The key is for the Bitcoin spike to cool down
As long as the price of Bitcoin continues to rise rapidly and Ether is left behind, an altseason is very unlikely in the short term.
A strong signal of an altseason would be a consolidation of the ongoing Bitcoin rebound followed by a rise in the price of ETH.
Given that the BTC/USD broke the USD 13,000 resistance level only a week ago, technically, an upward trend in the Ether and Altcoin market could take several months.
However, so far, capital in the altcoin market still appears to be shifting towards Bitcoin. As reported by Cointelegraph, the decentralised exchanges, or DEX, have continued to lose volume in October. This indicates that demand for DeFi tokens is probably slowing down due to the current momentum from Bitcoin.