According to one cryptocurrency analyst, altcoins will go through major ups and downs until Bitcoin confirms its breakthrough of $100,000.
“We are waiting for this active movement and will look at capital circulation,” Pav Hundal, senior analyst at cryptocurrency exchange Swyftx, told Cointelegraph at Aus Crypto Con 2024.
Altcoins ‘will remain unstable’
Hundal said there are “rough diamonds” like several memecoins outperforming Bitcoin (BTC), but the altcoin will “remain volatile” until Bitcoin passes six-digit price levels. On November 23, Bitcoin narrowly missed $100,000, reaching $99,605. At the time of publication, the price was $96,476.
At the time of publication, Bitcoin was trading at $96,476. Source: TradingView
“What I mean is, you could see a 20%, 30%, 40% rise, but you would reverse most of that movement the next day,” Hundal said.
On November 21, Solana (SOL) posted a 13% gain in less than 24 hours, but then gave up nearly 13% over the next five days.
Even the major memecoins by market capitalization showed this pattern. According to CoinMarketCap data, on November 15, Pepe (PEPE) surged approximately 93.2% in the 24 hours following the announcement of its listing by Coinbase and Robinhood, before retracing nearly 22% of that gain the next day.
When asked if PEPE has the potential to do “an 800% thing” as seen in previous cycles for Doge (DOGE), Hundal said, “I’m not discounting that, but it’s really necessary when you’re talking about high market caps.” said. “Capital is flowing in.”
“This kind of thing becomes more possible if Bitcoin dominance returns to the downside.”
Bitcoin dominance measures Bitcoin’s market capitalization as a percentage of the total cryptocurrency market.
Bitcoin dominance is key
Hundal said Bitcoin dominance could reach the 65% to 67% range or even the “70%” range before it starts to decline.
“To me, it’s not a case of trying to pick a PICO top position for Bitcoin dominance as to when the altcoin market will start to collapse,” Hundal said.
Bitcoin dominance at the time of publication was 58.3%, according to TradingView data.
At the time of publication, Bitcoin dominance was 58.3%. Source: TradingView
“The sharp decline in Bitcoin dominance will begin next month,” pseudonymous cryptocurrency trader Mikybull Crypto said in an X post on November 28.
Nonetheless, CryptoQuant CEO Joo Ki-young recently told his 374,200 X followers not to expect altcoin season to be like previous cycles.
Joo said this is due to institutional investors having little interest in the speculative token that is driving the current Bitcoin rally.
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“Unlike cryptocurrency exchange users, institutional investors and ETF buyers have no intention of converting their assets from Bitcoin to altcoins,” Ju said.
“For altcoins to reach record high market capitalizations, significant new capital will need to flow into cryptocurrency exchanges. Altcoin market caps lower than previous ATHs indicate a decrease in new liquidity from new exchange users,” he said.
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This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.