A rise or fall in volatility can influence the entire crypto market
The short-term highs of Bitcoin, Ethereum, and almost all of the more than 8,000 coins in the $2 trillion class have reached relatively short-lived ATNS. A rising or falling crypto tide can lift or push back all crypto assets.
Crypto market and Short-term ATH
Bitcoin, Ethereum, and almost all of the more than 8,000 cryptocurrencies hit relatively short-lived highs last week. The main pair and virtually all other assets fell, by more than 10% over the weekend. At the same time, Bitcoin returned under the well-known barrier of $60K, and Ether was lucky that it retained a new level of $2000.
Virtually all cryptocurrencies are like “sleepwalkers”, moving in unison so quickly upwards that we forgot to look at the big picture and ask ourselves, what is really going on in the crypto space now?
Bitcoin and cryptocurrencies have established themselves as one of the best asset classes, but every crypto asset is still highly correlated with Bitcoin, and sentiment can still be quite fragile. Meme (DOGE) now occupies one of the first places in terms of market capitalization among cryptocurrencies. Unfortunately, news of the government’s actions, whether it’s unfounded rumors that the US Treasury is pressing charges against money laundering, or the governments of Turkey and India are banning cryptocurrency, or power outages in China, as it turns out, can still lead to a sharp market collapse when everyone rushes to look for a way out.
But when the crypto market sells out, where does the money go? Back to the past, to overvalued government stocks or government treasury bonds with negative real returns? Or will it stay in the future, but in better memes that address the scalability issue and talk about the environment?
The impact of BTC volatility on Other Cryptocurrencies
This really should be the season of alternative coins. Many “investors” do not tend to accumulate Bitcoins and Ethers, but build portfolios based on them. We are seeing the emergence of a cohort: “What about this token that my friend told me about. Has he been dealing in cryptocurrency since 2017?”, which adds to the excruciating volatility.
Institutional money is still flowing into Bitcoin and Ethereum, and most retail investors would probably be better off just buying and holding a portfolio of these two cryptocurrencies than emulating their cryptocurrency friend’s latest and greatest advice.
Most likely, BTC can break through $60,000 again, but before that, we may see some sideways action. Some market participants have undoubtedly already bought the dip, but others can wait to learn more about the recent crash and avoid a new one before they become comfortable buying at these levels again. Whether the BTC tide is rising organically or falling due to news of cryptocurrency-related penalties, we can assume that others will follow.
Have you noticed that now is the time for amateurs? They are everywhere, even where they are not supposed to be: in medicine, in law enforcement agencies and the authorities. They also exist in the crypto space. It was their presence that led to the current $9 billion drop in BTC. And why?
There is a beautiful term for trading: weak hands. They are the amateurs who do not believe in the Cue Ball, but use it as a hype and a hobby that gives sharpness to the senses. But as history has shown, the crypto industry gets rid of them perfectly.