Following a recent decrease in Bitcoin’s value, alternative coins have seen a surge in their prices. While Bitcoin takes a pause, other digital currencies are experiencing significant gains in the double digits. Investors are taking advantage of this opportunity to diversify their portfolios and make up for previous losses.
Usually, individual investors plan their moves around Bitcoin’s peak, viewing it as an ideal moment to shift their investments towards alternative coins. With signs indicating that Bitcoin might be reaching a temporary peak, could this be the perfect opportunity to invest in alternative coins at a discounted price?
Bitcoin’s Market Dominance is on the Rise, But There’s a Hitch
Currently, the focus is on Bitcoin’s performance. After recovering from the turmoil following the FOMC announcement, Bitcoin is edging closer to the $100K mark, trading at $97K at present.
However, the road ahead might not be smooth, as there are still challenges to overcome. Despite Bitcoin’s market dominance increasing to 59%, this does not guarantee a bullish run. There are psychological barriers that Bitcoin still needs to overcome.
One concern is that the greed index has dropped to levels seen in early November. A slight downturn could push it into the “fear” territory, suggesting a cautious approach from traders – a sensible move following the recent market decline.
Additionally, short-sellers are profiting from betting against Bitcoin, a strategy that can be as profitable as buying low and selling high during a market cycle.
Considering these factors together, while Bitcoin’s current price might seem attractive, the prudent sentiment among investors hints at a possible phase of consolidation in the near future.
Meanwhile, the alternative coin market has been flourishing during Bitcoin’s recovery, leading the way among the top gainers. If this trend persists, many alternative coins could be on the brink of a significant upward movement.
Is It Time to Explore the Dip in Alternative Coins?
The upcoming days will be crucial in determining whether the alternative coin market is indeed attracting new investments.
Recent activities indicate that prominent investors are acquiring major alternative coins – a classic sign of a market bottom forming. However, a strong recovery might still be premature.
Why? Firstly, Bitcoin is still in the early phases of its recovery. As mentioned before, the line between “consolidation” and “correction” is thin, leaving the market in a delicate state.
Furthermore, the correlation chart between ETH and BTC suggests further potential downside unless the RSI drops to historical lows. This uncertainty could make alternative coin investors wary, at least for the time being.
To make savvy decisions, focusing on lower- to mid-cap alternative coins could lead to faster returns given the current market conditions.
High-profile alternative coins, on the other hand, are closely intertwined with Bitcoin’s price movements and pose greater risks – especially until Bitcoin displays clearer signs of consolidation or market overheating.
Additionally, as whales accumulate significant amounts of major alternative coins, these assets could become more susceptible to manipulation. Therefore, maintaining flexibility could be crucial in seizing opportunities, which, at the moment, might be found in lesser-known, small-market gems.