Ekta Mourya, journalist and spot markets specialist, gives her insight into the current moment for altcoins and what we should expect in the future
The altcoin rally that started after the May 19 crash continued and Ethereum and major DeFi projects such as LINK, AAVE, CRV and SUSHI recovered. At the same time, Bitcoin was being pulled off the exchanges at the highest rate since November 2020. Along with the price trend, Bitcoin off the exchanges when the Mayer Multiple fell below 1.0 signaled fear in the market. Fear is bullish for the price of Bitcoin in the short term.
Bitcoin Pricing Chart | Source: CoinGecko
Based on the price chart above, Bitcoin price is almost at the same level as the last week of May 2021. After every 10% drop in price, Bitcoin accumulation has continued into the current bull season. Bitcoin coming off exchanges with these metrics is optimistic for both Bitcoin and Altcoins in the short term. Once Bitcoin dominance is low, there is room for an altcoin rally, led by Ethereum and LINK, as both are correlated with Bitcoin.
In addition, the latest drop in Bitcoin price, down to the $31,000 level, has also led to a drop in the market capitalization of altcoins. The high correlation between Bitcoin and the main altcoins has led to the impact on the high price of altcoins. However, bearish sentiment among Bitcoin traders has led to a decline in the domain and this is bullish for altcoins. Bitcoin dominance was 41%, and this is another metric that signaled that an altcoin rally is more likely than the same for Bitcoin.
Among altcoins, the number of active Ethereum addresses continued to rise each day, signaling that an increase in the number and volume of altcoin chain metrics is optimistic for them. Bitcoin concentration by large HODLers has dropped to 12% and this is indicative of the rise in altcoins. Bitcoin remains undervalued at the current price level, as do the major alts. While sentiment is largely bearish, it is expected to turn bullish soon.
In the past, Bitcoin rangebound price action was high for altcoins. The same is likely at the current price level based on the trend. In addition, institutions are not as interested in investing in DeFi projects, however, they have invested in top-tier Bitcoin, Ethereum and altcoins. This has an upward impact on altcoin prices, both in the long and short term.