Crypto market cap hits record high of $883bn – will altcoins explode now?
The combined market capitalisation of all crypto assets on the global market has reached an all-time high of over $883 billion.
The bull run has been fuelled primarily by the strong momentum of Bitcoin and Ethereum. While many alternative cryptocurrencies lagged behind BTC, Ethereum was one of the few to follow BTC’s upward trend.
Following the rally, sentiment around the Bitcoin Millionaire market remains mixed; some analysts say a local top has likely formed. Others believe an alternative cryptocurrency (altcoin) season is on the horizon.
What would an altcoin season look like?
When the price of bitcoin corrects sharply, the likelihood of an altcoin season decreases. Altcoins typically rally when Bitcoin consolidates after a big rally.
This pattern usually occurs – because when BTC stabilises, investors often look for riskier plays in the crypto market.
Traders could go long or short bitcoin with leverage, but if volatility is low, the funding rate could be burdensome.
The futures funding rate is a mechanism that exchanges use to prevent the market from swinging heavily to buyers or sellers. So if there are more buyers in the market, then buyers have to compensate sellers by paying a funding fee every eight hours.
When Bitcoin consolidates, altcoins tend to see an increase in volume. Some traders believe Bitcoin could reach a temporary peak in the near future.
A peak does not necessarily mean that a deep correction has to take place. BTC could consolidate and show low volatility as it begins to prepare for its next run.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, says the likelihood of a temporary bitcoin peak is increasing. If this happens, altcoins such as Ethereum are likely to rally, the trader says:
„The probability of a temporary top becomes significant at this point. #Bitcoin falls intraday after hitting the second target to the downside, while #Ethereum bounces sharply higher in the $BTC pair. This is great news for altcoins in general.“
Similarly, another trader known as „Altcoin Psycho“ writes that past history suggests that a bitcoin peak at current levels is increasingly likely.
The „reversion clouds“, a momentum indicator that shows key resistance and support areas, signal that BTC is approaching its ceiling. The trader:
„I have 90% of my cryptocurrency tied up here. I have no idea what will happen next. BUT, what I can say is the last time BTC wicked as above the reversal clouds was at the 201 top. Again, I have no idea what will happen next. I’m not shorting. But I’m more than happy to lock in profits here.“