With Bitcoin [BTC] riding a massive bullish wave, breaking resistance after resistance, you would be forgiven if you turned a blind eye to the performance of the altcoins. The massive BTC price rally shrank the altcoin market to under 40 percent at one point, but now it looks like the king coin may face stiff market opposition.
According to Binance Research, the analytics wing of the largest cryptocurrency exchange in the world, altcoins might be on the verge of a comeback. Earlier in the year, many analysts had claimed that it was “altcoin season,” which withered away with the April 2 ascendance when Bitcoin broke $5,000.
However, with BTC’s price looking to consolidate on the edge of $8,000, altcoins have finally made a move, and their market capitalization [denominated in BTC] edged up by 15.75 percent during the period May 14-May 20. During the period, Bitcoin saw a roller-coaster ride, breaking the $8,000 ceiling twice, following which it dropped below $7,100.
The last time altcoin performance rose by this proportion against the Bitcoin price was from December 23 to 29, where the gain stood at 16.2 percent against the BTC price. During this period, Bitcoin broke $4,000, added another $250 to its price, before falling back down to $3,650.
Since the beginning of April, altcoins have been consistently and severely declining against Bitcoin. Within a period of over a month, BTC price has risen by over 90 percent to its press time price of $7,914, while several altcoins have either slowed down their growth, halted it altogether or are trading in the bearish market.
Further, the total altcoin market cap, as determined by Binance Research “in BTC terms,” has fallen by 34 percent since the price rally began in April. The research further suggested that this Bitcoin market dominance over altcoins is confirmation of a bull-run, based on historical data.
Binance research added,
“Over the past 5 years, this type of divergence has occurred more in bull markets (246 of 300 days).”
The recent Bitcoin pump and corresponding altcoin nosedive resulted in a 40-day positive divergence of BTC price, compared to the altcoin market cap. Previously, two consecutive negative divergences were witnessed in July 2018 and January 2018, respectively.
Binance’s bull-run suggestion is further evidenced by the positive divergences noticed between the two factions. When Bitcoin raced upwards of $19,500, two positive divergences were witnessed, with mere days between them. The first 32-day divergence occurred in October 2017 and then in late December 2017, when the bull-run was at its peak.
Prior to these notable price movements, the largest positive divergences occurred over isolated cases. The first in October 2015, lasted 71 days, when Bitcoin rose above $400. The second positive divergence lasted 89 days.
Many analysts have pointed out that the correlation of the altcoin to the US dollar holds more relevance than the altcoin to its crypto-superior, Bitcoin. However, given historical price movements, the information is telling.
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Wall Street is on the losing side of Bitcoin’s impressive price rally
Wall Street, complete in their tailored suits, suede shoes, and leather briefcases, have once again placed their bets against Bitcoin.
Despite the fact that the collective cryptocurrency market broke the $350 billion mark, with Bitcoin alone accounting for 62 percent of the same and trading at $2,000 over its price at the beginning of the week, hedge funds were not impressed.
The Wall Street Journal citing data from the Commodity Futures Trading Commission reported that crypto-vested managers were holding 14 percent short positions more than long ones on the now, primary avenue for BTC Futures contracts, the Chicago Mercantile Exchange [CME].
A key point to remember here is that CME contracts are cash-settled and hence, no Bitcoins are actually being transferred, with the traders simply placing bets on the cash-equivalent price of Bitcoin.
Well-suited hedge fund owners however weren’t alone, with other stakeholders excluding the small scale crypto-investors holding a 3x on short positions, indicating a further pessimistic sentiment.
Smaller investors were however, long on the BTC market, with the CFTC report stating that investors holding 25 BTC or less were holding four times the long positions as their more exuberant counterparts. It should be noted that the CFTC report was prepared as the price of Bitcoin was still in the $9,000 range, prior to the five-figure surge.
BitMEX, a popular cryptocurrency exchange offering derivatives trading services, saw over $64.38 million in shorts liquidated when Bitcoin broke $10,000. The same was replicated when the price shot past $12,000.
Short positions indicate not just a sheepish position, but rather an investors’ contractual affirmation that the price of an asset will more likely fall than rise. Long positions on the other hand, indicate a pessimistic point of view. Hence, based on Wall Street’s trading activity, institutions are not buoyant about the cryptocurrency market.
In what could be a reverse-catalyst for the digital assets industry, Bitcoin decided to use this negativity as fuel to breach $11,000 earlier this week. Not done with the Wall Street bears just yet, BTC pumped yet again on June 26, with the price breaking the $12,000 ceiling with a further climb to $13,000 looking likely.
Who said Coin Street doesn’t go past the Wall Street express lane?
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