According to an independent market analyst, holders of altcoins face the risk of facing double losses if the price of Bitcoin corrects by another 30%.
Altcoin traders and investors should seek coverage if Bitcoin (BTC) suffers from major price drops.
So believes Filbfilb, an independent market analyst and co-founder of the Decentrader suite of operations. In a tweet posted Friday night, the pseudonymous entity said that a 30% drop in the Bitcoin market could cause altcoins to fall twice as hard.
When Bitcoin consolidated between $ 50,000 and $ 60,000 in the March to May period, the altcoins exploded. Similarly, the recent correction in the Bitcoin market, which witnessed the flagship cryptocurrency fall from around $ 65,000 to just $ 28,000, also saw altcoins crash; still, at the levels, they held as support as Bitcoin got stuck in the $ 50K- $ 60K range.
Bitcoin price vs. altcoin market capitalization. Source: TradingView, Filbfilb
Filbfilb noted that altcoins have faced so-called “rebound risk,” hinting that even a small downward shift in the Bitcoin market could cause altcoins to drop twice. The statement came as Bitcoin prices fell to $ 30,173 following a downward correction of 15.58% week-to-date.
“[Altcoins], therefore, they carry a significantly higher downside risk than Bitcoin with [BTC / USD] threatening lows, ”Filbfilb tweeted. “If bitcoin fell lower, losing another 30% in the worst case, I would expect that [altcoins] they would correct to do 2 times worse from here “.
“If Bitcoin fell lower, losing another 30% in the worst case, I would expect the alts to correct to do 2 times worse from here.
Bitcoin’s crashes in May and June reduced its annual return to date to 5.71%. Meanwhile, while large-cap altcoins fell as a whole, their returns to date fared much better.
For example, Ether (ETH), the second largest cryptocurrency, fell just over 60% from its mid-April peak of $ 4,384. However, their performance to date was 141% at press time. Similarly, Dogecoin’s gains to date were 4.112% even after falling almost 80% from its all-time high of $ 0.76.
Bitcoin YTD vs. YTD altcoins in 2021. Source: Messari
From the looks of it, altcoins provided better profit-making opportunities for their holders than Bitcoin. As a result, investors could make up for their losses in the Bitcoin market simply by selling their altcoin earnings for fiat money and / or rotating the funds back into BTC.
Bitcoin and $ 20K
Lately, Bitcoin has been able to avoid a deeper pullback below $ 30,000 despite repeated attempts.
Bitcoin consolidation continues within the $ 30K-40K area. Source: TradingView.com
Many analysts, including Mercuryo founder Alexander Vasiliev, see Bitcoin’s bullish resistance as a sign that it will eventually break above $ 40,000 and rise to its previous highs near $ 64,000 in the medium and long term.
However, some analysts who were previously bullish on Bitcoin have changed their bias in the wake of the cryptocurrency’s latest downward correction.
For example, Scott Minerd, chief investment officer at the multi-billion dollar investment firm Guggenheim Partners, told CNBC on Friday that he expects Bitcoin to drop to $ 15,000.
In February, just as Bitcoin was breaking through the $ 30,000 resistance, Minerd predicted that its price would hit $ 600,000.
Clem Chambers, the CEO of financial analysis website ADVFN.com, also turned bearish for Bitcoin, noting that Bitcoin could slip back to $ 20,000 due to capitulation sentiment. He wrote in his SeekingAlpha article:
“The next leg down appears to be here, and it will be the final big move that will lead to a repeat of the crypto winter we have endured before.”
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