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Why the price and volume of Bitcoin are rising together is bad news for Ethereum and the “old season”.

October 31, 2020

Bitcoin (BTC) absorbs the volume of the entire cryptocurrency market as its price continues to rise. This is causing the alternative cryptocurrency (altcoins) market to retreat, which has led to increased selling pressure and low demand from buyers.

October 30th Santiment researchers pointed to the increasing volume and dominance of Bitcoin, while Chainlink (LINK), Ether (ETH) and Binance Coin (BNB) had problems. you they write::

“The dominance of #Bitcoin is still evident, especially through the trading volume. When comparing other major blockchains over the past day, note the decline in trading volume from ETH, XRP, LINK and BNB while BTC values ​​remained high. “

At least in the near future Traders believe the so-called “old season” will not return, especially since bitcoin has better performance than altcoins.

Bitcoin’s trading volume compared to other major cryptocurrencies. Source: Santiment

When would altcoins recover?

Why the price and volume of Bitcoin are rising together is bad news for Ethereum and the “old season”.
Why the price and volume of Bitcoin are rising together is bad news for Ethereum and the “old season”.

Historically, the cryptocurrency market has been bull markets during the period Bitcoin saw a rapid upward trend for the first time. Altcoins then followed after BTC hit a local peak or an all-time high.

Traders expect a similar pattern in the current price cycle. In general, the altcoins are expected to recover in 2021. But until BTC stabilizes and completes its rally, traders don’t see a suitable uptrend for altcoins.

From the lows of September 13th Bitcoin’s dominance index rose from 56% to 63.4% and saw an increase of 7.4% in two months.

Bitcoin Domain Index. Source: CoinMarketCap.com

But still, Michael van de Poppe, Full-time trader on the Amsterdam Stock Exchange, He said we could see altcoin season in the first quarter of 2021. The He said::

“The domain has reached the red zone here. I’m still waiting for a top build until December. Then -> old season in the first trimester. “

The problem with altcoins is the current dynamics of the cryptocurrency market. When bitcoin is rising rapidly, altcoins will fall when capital returns to BTC. When BTC falls, the altcoins fall as a whole, placing the altcoins in a precarious position.

A pseudonymous trader known as “DonAlt” said he has been shorting out Ether for several days. He said if ETH doesn’t rebound against bitcoin, a wider retreat of the altcoin market is possible. The dealer he showed::

“I’ve been a short ETH for a few days. Nevertheless, the ETHBTC is getting closer to support. So there is a good chance that things will go up here again, if not the entire altcoin market will fall quite aggressively. “

Likewise a dealer known as “CryptoCapo” said that the technical structure of Altcoins is not convincing in the short term. This makes Bitcoin more attractive to tradersas it showed strong momentum in October. Highlighted::

“Let’s be honest: there are alts that look really bad, alts that look decent, and alts that look good. I don’t see an altcoin that looks really good right now. You have to choose wisely. “

The key is that the bitcoin rally is cooling off

As long as the price of Bitcoin continues to rise rapidly and Ether is lagging behind, an off-season is highly unlikely in the foreseeable future.

The price of ether versus bitcoin. Source: TradingView.com

A strong sign of an off-season It would be a consolidation of the ongoing Bitcoin rally, followed by a rise in ETH prices.

Considering the BTC / USD pair technically crossed the $ 13,000 resistance level a week ago, An uptrend in the ether and altcoin market could take several months.

Until now, however Capital in the altcoin market still seems to be shifting towards bitcoin. As Cointelegraph reported that Decentralized exchanges (DEX) continued to lose volume in October. This suggests that demand for DeFi tokens is likely to slow down due to Bitcoin’s current momentum.