After rocketing toward $14,000, Bitcoin is now struggling to find support at the $10,000 level. It fell below this important benchmark for a short period, but has now rebounded back to the $10,600 plateau. Several noteworthy analysts predicted that a test of this territory had been missed weeks back and might occur, but others have suggested that it was time to take a breather, suggesting that BTC might hover between $10,000 and $14,000 for quite some time. Curiously though, Bitcoin’s dominance fell from 63% to 61%, but there has not really been a rally in the altcoin sector, as many had anticipated.
Mati Greenspan, senior market analyst at brokerage eToro, informed his clients that:
The deep pullback last Wednesday night was like a bucket of ice water that was dumped on the anxious crypto market, which was indeed getting a bit too hot. The prospect of prices rising too far too fast had some traders feeling fearful, so it’s good to see things relaxing somewhat.
The “pullback” has continued, as depicted in the hourly “BTC/USD” chart below, but this snapshot was taken before its recent recovery:
Aside for the “two far, too fast” contention, other analysts point out that it was time for the Facebook “hype”, which has dominated financial press headlines for weeks, to run its course, as far as bolstering crypto prices was concerned. Nothing spectacular occurred at the G20 Summit in Osaka, Japan, over the weekend with regards to geopolitical tensions or trade negotiation angst, but the V20 Summit, where crypto executives commiserated with global regulators, was a positive step for the industry. Crypto advocates, however, had been expecting a surge in altcoin values, but no go.
As reported over at Coindesk:
Bitcoin’s price drop is hurting the broader market as well. Only seven out of the top 100 cryptocurrencies by market capitalization are reporting gains. That said, most of the losers are outperforming bitcoin, which was the 11th worst performing top-100 cryptocurrency of the last 24 hours, at 09:00 UTC. For instance, EOS and bitcoin cash (BCH) were down 3 percent, while cryptos like ether (ETH) token and XRP reported 6 percent and 4.5 percent drops, respectively.
A general trend of note in the crypto space has been that there are ebbs and flows of investor support for the more risky token programs. When Bitcoin dominance drops, it is usually a sign that investors have raised their risk tolerance and chosen to explore the multitude of other crypto investment alternatives. The recent 2% dip in BTC market share has actually coincided with another curious indicator of crypto interest — worldwide “search interest”, as defined by Google. Searches for the term “ altcoin” are quickly approaching 12-week highs, a sign that investor sentiment may be about to shift.
Despite these findings, the analyst community does not foresee altcoins outperforming the market leader. Yes, there are many programs that will do better than Bitcoin and have done so in the recent rally. You do not have to search very far for evidence of this fact. While Bitcoin has bounded 200%, Litecoin and Binance Coin have recorded returns of 600% and 400%, respectively. As institutional involvement expands, observers expect a “bifurcation” to take place. As the crypto market matures, many analysts expect “a large rift to grow between those projects deemed promising and those deemed horrid”.
Peter Brandt, a notable commodities and crypto analyst, is one, who favors the argument that a “bifurcation” may continue. He has quipped that: “Crypto maniacs, who believe altcoins will benefit from bull runs in Bitcoin… may be very disappointed.” He also compares the present situation to when the “dot.com bust” occurred back at the turn of the millennium. Companies of real value went on to achieve wonderful things, but the “alt-coms” of the time, as he called them, suffered greatly and died out.
According to Coinmarketcap.com, there are over 2,300 token programs vying for investor support in the market today. Several analysts have suggested that a “culling of the herd” is necessary. It is time for consolidation, and survival of the fittest. One Binance executive recently echoed this sentiment about the coming market cycle in an interview with BlockTV. According to him, “Investors will start to determine the good assets from the bad, hence why many cryptocurrencies are performing differently”.