Bitcoin Breaks $10k Again, as Most Alts Dip in BTC Values

Bitcoin (BTC) broke $10k after a long correction. However, this move came at the expense of alts. Alts are holding up in terms of fiat values, but they have been outpaced by BTC in the short term as regards BTC values.

These sort of bittersweet victories are common in cryptocurrency (see the historic relationship between Bitcoin and alts).

In simple terms, it is the norm for one set of coins to do well while another set treads water or declines in price. Sometimes one set is Bitcoin, and the other set is everything else (this is very common); sometimes one set is a type of coin (like privacy coins), and the other set is everything else (this is common too). Sometimes everything rises or falls together; this is ideal when they rise and less-than-ideal a correction when they all fall in tandem.

Specifics aside, the bottom line is that this happens, and it tends to happen in repeating cycles and creates what one could call “the cryptocurrency rotation.”

It is often hard to know what cycle we are in or what the mood of the market is until it happens, but this shift was somewhat expected and not hard to see it as a possible world.

Bitcoin broke $10k (in terms of USD and USDT), and $10k was a big psychological barrier. Those who had been in cash perhaps now feel like Bitcoin is a safe bet again. Those who had been in alts feel the same way, and they move their BTC over. This has an effect of pushing up Bitcoin faster than alts. As BTC climbs and alts lose value against it, traders see a sea of red on their BTC pairs. This has its own psychological effects and the cycle is reinforced. Then this starts showing on charts, and the cycle is reinforced by technical analysts. Then more money is pulled from alts and put in BTC, and the cycle is reinforced.

We end up with a snowball effect.

This is the sort of series of events that can launch us into the next cycle. Specifically, however, it is the type of set of events that launched us into the cycle we saw from September to December where Bitcoin fully outpaced the rest of the cryptocurrency market on average. It is the opposite of what occurred from December to January where alts outpaced BTC (where essentially everything noted above happened in reverse; that is, alts outpaced BTC as BTC declined against fiat and alts).

It is far too early to say what will happen next or what this next cycle will look like (historically we can guess, but we can’t know for sure).

Alts could easily recover and make gains against BTC. BTC could rip right up to $20k decimating everything in its wake. Or, and this is ideal for most investors, Bitcoin could climb steadily back toward all-time highs, giving alts room to breath and perform, and thus everything could move up together. If this is the case, alts are increasingly going on sale in terms of BTC, and we should see a nice bounce once BTC steadies.

The crypto market is not built on wishes, however. Instead, it is built on trend analysis, new tech, and human emotion.

The sooner we can predict future trends based on historical trends and present data, or more generally the sooner we can see a pattern coming by analyzing trends of all sorts, the better we can prepare for the next cycle in the rotation.

At this stage giving up on alts on a whim and in a panic probably makes very little sense, however, if BTC keeps running we have to be logical and entertain a possible world where Bitcoin straps on the rocket boots and leaves a trail of suppressed alts in its wake. It has happened before. In fact, it tends to happen in the cycle after a correction following BTC and alts reaching all-time highs.

If Bitcoin is going to run and not take alts with it, logically one doesn’t want to be only in alts or cash, they want to be at least partly on the BTC mothership. Of course, this is exactly the logic that is driving Bitcoin’s price upward at the expense of alts.

TIP: This is the sort of thing you should think about before pronouncing Bitcoin to be dead. Every once in a while Bitcoin loses dominance against alts and the world begins to question if we have entered a new era. One day we may enter a new era, but so far and so far what has happened is that the cryptocurrency market is subject to cycles and waves. When Bitcoin dominance is at its lowest, it tends to not signal the end of Bitcoin. Instead, it signals the start of a new cycle in which the Bitcoin phoenix rises from the ashes once again. In my opinion, the goal isn’t to declare a new king when we see all-time highs. We need to study each coin carefully and build positions when great coins are at lows, to sell after a run and avoid selling during the run, and to understand where we are at in the cycle to avoid mistiming buying and selling.