Proper Altcoin Season While Bitcoin Drops Has Traders “Cautious”
The recent “altcoin season” playing out over the last several days while Bitcoin downtrends, has traders “cautious” about what could be next. As for what could possibly lie ahead that has crypto traders so fearful, is an altcoin-led blow-off top that sends crypto back into the troughs of a short-term bear phase.
Here are the unique market factors at hand that could give the crypto market reason to proceed with caution.
Cautious Crypto Trader: Beware Of Possible Blow-Off Top In Alts
Bitcoin is now trading at $35,000 after making another attempt to push above $40,000 yesterday. $5,000 per day candles in either direction are now the norm in crypto trading, but that’s not what has some top analysts and traders spooked about the recent price action.
Related Reading | The Striking Similarities Between The 2017 Bitcoin Peak And Now
Ever since the peak of the 2017 bull market, have crypto investors been awaiting an altcoin season to bring enormous gains in a matter of days once again. Life-changing wealth was generated, then lost as quickly as it arrived.
The spark to kick this off was supposed to be Bitcoin passing $20,000 but that feat came and went, and only now are altcoins popping off while Bitcoin has begun to downtrend. It has a top crypto trader “cautious” about a potential “blow-off top” in altcoins. And here’s why.
Chainlink and Polkadot are beginning to eclipse Bitcoin | Source: BTCUSD on TradingView.com
Altcoin Season While BTC Drops Has Marked Past Crypto Market Tops
Crypto trader Johnny Moe is approaching the current price action across crypto, and for good reason. Bitcoin is downtrending, all while altcoins are soaring. Polkadot gained 75% in two days, and Chainlink just set a new all-time high.
Bitcoin and altcoins tend to uptrend together, the handful of times when the two asset types diverged, it has signaled a top was in. Altcoins were recently surging alongside Bitcoin as it pushed above $40,000 and setting new all-time highs, but the latest rally in altcoins is taking place while the leading cryptocurrency by market cap is turning down.
Bitcoin’s rejection at $40,000 recently is the first higher low on daily timeframes in months, and if a lower low is put in, the cryptocurrency will have by definition fallen into a downtrend. Altcoin price action continuing to fly while Bitcoin dives, could be a repeat of the conditions that caused the 2017 peak.
Related Reading | Capital Manager: Ethereum Will Double In Two Weeks Once ATH Is Broken
If this is indeed the top, it might be bad for Bitcoin, but altcoins could have another two more weeks left of momentum and gains before the blow-off top is complete and the rest of the crypto market turns around.
Is this trader right to be cautious? Or is bear market PTSD getting the best of them, and this latest “downtrend” is just another opportunity to buy the dip?
Featured image from Pixabay, Charts from TradingView.com