As a seasoned crypto investor with battle-scarred fingers from navigating through countless market fluctuations, I find myself intrigued by the recent shift in the altcoin market dynamics. The seller exhaustion and dwindling open interest have caught my attention, as they could potentially signal a bullish momentum for altcoins in Q4.
Although Bitcoin‘s open interest remains substantial, experts find it hard to make the same claim about other cryptocurrencies, or altcoins. The total open interest for these altcoins, excluding Ether (ETH), has dropped by a staggering 55% from its all-time high, which was reached on March 25th.
The current aggregated value for these crypto assets is $8.75 billion, indicating that they have reached a point of seller exhaustion. According to analysts at the crypto exchange Bitfinex, this is part of a significant shift in relative altcoin strength against Bitcoin.
Altcoin Sellers Are Exhausted
According to the most recent Bitfinex Alpha report, there’s been a shift in market trends: instead of turning to Bitcoin as a safe haven during turbulence, investors are now spotting worth and receiving favorable indicators from the alternative coin market.
Generally speaking, when the market experiences a decline, traders tend to sell their altcoins, either for Bitcoin or for traditional currencies. This action increases Bitcoin’s dominance and decreases that of altcoins. This behavior is driven by the belief that Bitcoin, being more stable, is a safer asset during turbulent times, according to financial analysts.
Bitfinex explained that recent shifts in the altcoin market might be due to a significant amount of selling being driven by exchange-traded funds (ETFs) withdrawals and direct spot transactions. As many altcoins have dropped approximately 80% from their all-time highs, it appears sellers are feeling tired or exhausted.
Bitcoin Dominance Decreases
Starting from early 2023, most altcoins have consistently lagged behind Bitcoin (BTC) in performance, with a few exceptions. If we take Ethereum (ETH) as a representative of all altcoins, Bitfinex data shows that the ETH/BTC ratio has been declining since late 2022 and is now below its 365-day Simple Moving Average. This means the ratio, currently around 0.042, is at its lowest point since April 2021.
In contrast to the Bitcoin sell-off causing seller fatigue and a decrease in open interest, there’s growing speculation that altcoins might surpass Bitcoin during market uptrends. Bitfinex suggests this could signify a significant shift in the crypto market landscape, potentially setting the stage for a very bullish trend in Q4.
In times when altcoins remain strong even during market downturns, it’s possible that Bitcoin’s influence (dominance) might be nearing a temporary peak. Following the financial market dip in early August, this dominance metric peaked at 57.7%, its highest since March 2021. However, the recent correction resulted in a decrease of 1.3%. On the flip side, the influence of lesser-known cryptocurrencies has grown by 4.4% instead.
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2024-09-10 18:24