After grabbing the fintech world’s attention with an out-of-control rise to record prices, Bitcoin has been getting pounded this past week. 92% of altcoins have outperformed Bitcoin on the week.
At the time of press, Bitcoin was down about 12% against the USD since its weekly open. This also marks a 25% drop from its all-time high of $42,000 on Jan. 8, 2021. Bitcoin’s market cap is now around $592 billion — nearly $200 billion below those highs.
And while the rest of the market was dragged down a bit with BTC, altcoins were holding strong. 92% of them, according to Messari data, outperformed Bitcoin over the last 7 days ending on Jan 20, 2021.
Bitcoin Gets a Little too Hot
Bitcoin breaking $20,000 was not entirely unexpected, but the run to $40,000 was so rapid that many were predicting a cool-off.
Likewise, despite the fact that Ethereum was the main driver behind the DeFi craze, its pump had lagged a couple of weeks behind Bitcoin’s. So money likely shifted from Bitcoin to altcoins, as traders were looking to capitalize on more gains and focus on stacking satoshis.
Perhaps most telling is the Bitcoin dominance chart. Bitcoin’s dominance of the crypto market reached 72% in early January, the highest levels in a year. Since then, dominance has been in a downward trend and is now around 65%.
Researcher’s at LongHash, a company that analyzes crypto data, noticed how well altcoins were actually doing.
According to LongHash, the top 69 altcoins with trading volumes over $100 million had a great week. Only 33% saw their price go down in USD value. On the upside, 46 of those tokens saw prices grow over 10% in that week (those prices have since slipped).
In a bullish comment, it claimed that Ethereum’s market cap could quadruple if it kept up with the rate of growth that Bitcoin has seen.
A New President, a New Precedent
For a number of reasons, analysts were predicting that U.S. President Joe Biden’s administration would be good in the fight against the pandemic and for financial stability.
Though some of his team is optimistic about cryptocurrencies, the stock market pumping to an all-time-highs on inauguration day says a lot about what the markets think. It’s possible that money is shifting from crypto into stocks.
Biden’s policies could see a lot of that cash flow back into crypto as investors look at Bitcoin as a hedge against the dollar.
A Missed Altseason
Even though altcoins have dropped during the Jan. 21 pullback, there could still be another altseason on the horizon. According to the Altcoin Season Index, Bitcoin’s rise was so dominant that few coins have outperformed it over the past 90 days.
Nonetheless, if institutional investors continue to invest in crypto, they may be looking to dive a little deeper than simply Bitcoin. Plus, with sectors like DeFi, active use-cases may be stronger than ever.
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