Altcoin traders and investors should seek coverage if Bitcoin (BTC) suffers sharp drops.
This is what Filbfilb, an independent market analyst and co-founder of the Decentrader trading suite, believes. In a tweet posted late Friday, the pseudonymous company said a 30% crash in the Bitcoin market could cause altcoins to fall twice as much.
When Bitcoin consolidated between $ 50,000 and $ 60,000 between March and May, altcoins exploded. Similarly, the recent correction in the Bitcoin market, which saw the flagship cryptocurrency drop from around $ 65,000 to just $ 28,000, caused altcoins to crash. still at the levels they held as support when Bitcoin was stuck in the $ 50,000 to $ 60,000 range.
Filbfilb noted that altcoins were at a so-called “catch-up risk” and suggested that even a small downward shift in the bitcoin market could move altcoins down twice. The statement appeared as Bitcoin prices fell to $ 30,173 after a downward revision of 15.58% since the start of the week.
“[Altcoins]therefore carry a significantly higher downside risk than Bitcoin [BTC/USD] threatening lows “, tweeted Filbfilb. “If Bitcoin went lower and, in the worst case scenario, lost another 30%, I would expect it [altcoins] to be corrected in order to do twice worse from here. “
“If Bitcoin fell lower and lost another 30% in the worst case scenario, I would expect alts to do 2x worse from here.”
Bitcoin’s declines in May and June pushed its year-to-date performance to 5.71%. While the top-cap altcoins fell at the same time, their YTD returns fared better.
For example, Ether (ETH), the second largest cryptocurrency, has fallen a little more than 60% from its mid-April high of $ 4,384. Still, at the time of writing, the YTD yield was 141%. Similarly, Dogecoin’s YTD gain was 4.112%, even after falling nearly 80% from its record high of $ 0.76.
So it appears that altcoins offered their holders better profit-taking opportunities than bitcoin. As a result, investors could offset their losses in the Bitcoin market by simply selling their Altcoin profits for fiat and / or converting the funds back into BTC.
Bitcoin and $ 20K
Lately, despite repeated attempts, Bitcoin has been able to avoid a deeper pullback below $ 30,000.
Many analysts, including Mercuryo founder Alexander Vasiliev, see Bitcoin’s bullish resilience as a signal that it would break out above $ 40,000 at some point and rise to its previous high of $ 64,000 in the medium to long term.
However, some analysts who were previously bullish on Bitcoin have flipped their bias following the recent bearish correction in the cryptocurrency.
Scott Minerd, the chief investment officer of billionaire investment firm Guggenheim Partners, told CNBC on Friday that he expects Bitcoin to decline to $ 15,000.
In February, just as Bitcoin broke the $ 30,000 resistance, Minerd forecast its price at $ 600,000.
Clem Chambers, the executive director of financial analytics website ADVFN.com, was also pessimistic about Bitcoin, noting that bitcoin could drop to $ 20,000 due to surrender sentiment. He wrote in his SeekingAlpha article:
“The next leg down seems to be here, and it will be the last major downward move that will result in a repeat of the crypto winter we saw before.”
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, so you should do your own research when making a decision.