Bitcoin price is only within striking distance of potentially hitting a new all-time high, or only about 15% up to set the new record. With the top tier cryptocurrency surprisingly weathering the macro turmoil recently, altcoins have suffered dramatically and bled for the most part while BTC has risen.
Legacy investors capitulate and shift their capital into BTC so as not to miss the upcoming final surge. But what exactly does that mean for the current altcoin season? It is over? Or will there be another upswing, as could be the case with Bitcoin – a move that is becoming more evident day by day?
Alt-Season, Bitcoin Dominance, and the Five Waves Down Theory
Bitcoin and altcoins have a very unusual relationship, despite being assets of the same class. Top traders like Nik Patel have worked for years to understand the strange, cyclical behavior between BTC and Alts and have achieved some success.
After such an explosive season of altcoin, the market is convinced that the music has already stopped, asset prices have peaked and have started to shift heavily into the strength of BTC.
Related reading | How 90 year old market magic predicted the Bitcoin outbreak
But just as Bitcoin’s recent withdrawal due to the relationship between Alts and BTC turns out to be almost little more than a massive cleanup of the bull market, this divergence between the two types of crypto-assets could be a similar cleanup.
BTC dominance suggests another downward wave. | Source: CRYPTOCAP-BTC.D on TradingView.com
Many analysts, like Tony Carrion of Elliott Wave International, believe that BTC is on the verge of entering a wave-five pulse against the dollar. That would suggest that BTC has just completed a fourth wave that ended up being a big bear trap. But what if alts are about to end a fourth wave against BTC and another wave follows? That is exactly the image that BTC dominance conveys.
Comparing the total altcoin market cap excluding BTC to the King himself shows that alts could be shockingly undervalued by comparison. A similar dynamic influence can be seen during the last cycle with the LMACD shown below.
Alts are comparatively behind BTC in the evaluation. | Source: CRYPTOCAP-TOTAL2 on TradingView.com
Which altcoin will survive best against BTC when retail returns?
If you look at the total crypto market cap and compare it to the Bitcoin price, there are some similarities between the two potential points highlighted by an ascending triangle. If the bullish chart pattern is valid, it would result in a similar upward move – and peak the cycle in both Bitcoin and Altcoins.
An ascending triangle fractal could push alts to new highs. | Source: CRYPTOCAP-TOTAL on TradingView.com
With so many altcoins already performing so well, capital could very well flow into other lagging coins, causing underperformance on alts that previously did well.
Related reading | Astro Crypto: Bitcoin slump in summer could bring a rich autumn harvest
For example, during the last cycle both BTC and ETH hit new highs, it was Litecoin and XRP that did the best during the last spike.
Both assets were well below the triangular consolidation in the last cycle and again lagged significantly. Is this time different? Not much has changed from cycle to cycle.
Underperforming altcoins could perform best in the next wave | Source: CRYPTOCAP-TOTAL on TradingView.com
The direction of BTC dominance can be deceiving as the direction of the chart is down when altcoins are doing well. The rest of the charts, using the same assets in unique comparisons, provide a more compelling argument as to why the altcoin season hasn’t even started. And the current divergence between BTC and Alts is the same type of market shakeout that most of the market just fell for in the BTCUSD trading pair.
The psychology behind this expectation is that the market has realized it was wrong about BTC and is selling USD, alts and everything to get back into position. As Bitcoin hits new all-time highs again and attracts more attention to the market, newbies will go to alts, not BTC.
The higher the high-ranking cryptocurrency gets towards USD 100,000 and more, the less likely anyone other than institutions or the extremely wealthy can afford it. Altcoins will be the next best bet – especially those that no longer have sellers, such as those that have previously underperformed.
This is the best alpha I can offer in terms of the future of #bitcoin price. I don’t think we’ll see any lower lows regardless of whether we continue to correct. Bears won’t make their profit until bulls get $ 100,000. All information directly from the source: https://t.co/BhmNxjeE4I pic.twitter.com/WU6snm9aCu
– Tony “The Bull” Spilotro (@tonyspilotroBTC) September 23, 2021
Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. The content is educational and should not be viewed as investment advice.
Featured image from iStockPhoto, charts from TradingView.com