The shocking Bitcoin rally has caused the cryptocurrency to hit twice its previous all-time high. By now, most of the altcoins have not yet reached the high they set years ago. This strange recent event, with altcoins increasing in value in USD but pounding on BTC pairs, has led the market into “uncharted territory,” according to a crypto analyst.
Will Bitcoin continue to completely dominate the altcoins from now on, or will a real altcoin season arrive in which the rest of the asset class significantly outperforms BTC?
The Bitcoin Bull Run that left altcoins behind
All eyes are on Bitcoin, which stretches from Wall Street to Main Street, and even the government and banks are finally paying attention. Hard-coded rarity is causing a supply shock and making the cryptocurrency soar to new highs with relative ease.
Nobody sells BTC, just buys. Investor fever and high prices have led many to turn to cheaper altcoin alternatives for cryptocurrencies such as Ethereum, Chainlink and Litecoin.
Related reading | Bitcoin Dominance Doji: Why 2021 could mean fate for altcoins
These assets have seen their USD value spike as well, but these altcoins on their BTC pairs tell an entirely different story.
An upward trend and price increase can be seen in USD pairs of important altcoins. However, with BTC trading pairs, every asset continues to trend towards new lows.
In the past, when Bitcoin broke its previous all-time high, an altcoin season caused the crypto-grade to beat BTC by a significant amount. However, history has yet to repeat itself in this cycle, as can be seen in the Bitcoin dominance table below.
Things are not at all playing out like they did the last time around in crypto | Source: CRYPTOCAP-BTC on TradingView.com
The current altcoin uptrend is nothing more than what has been observed in crypto in the past. One cryptanalyst who is closely watching this strange divergence between the closely related crypto assets says this is “uncharted territory” for the market.
But what exactly could that mean? Bitcoin, which outperforms everything else so much, could be because institutions are only focusing on the top cryptocurrency this cycle. This asset class wants BTC to offset inflation risk. In the meantime, altcoins only pose additional risk given their history and limited use case without a few outliers.
Related reading | Analyst: Post Bitcoin, traditional finances are pouring into DeFi, not Ethereum
Ethereum has the green light from regulators and will be one of the few coins with long-term value. DeFi, which is built on the back of ETH, will also work well. But what do altcoins from the past cycle that did little to bring a working product to market have to offer institutional money this time around?
Retail investors who bought altcoins during the last bull run are still at a loss. Who exactly is buying altcoins? And is it enough to reach new heights?
Featured image from Deposit Photos, Charts from TradingView.com