2020-11-12 18:58 |
The price of Ethereum is struggling against both Bitcoin and the U.S. dollar again, while BTC is surging with momentum. A similar trend occurred throughout October when BTC rose while ETH stagnated for a prolonged period.
The most likely reason behind the stagnancy of Ethereum amidst an ongoing Bitcoin rally is BTC vacuuming the volume from the cryptocurrency market.
Across major exchanges, there is a massive gap between Bitcoin’s volume and other top cryptocurrencies.
This trend might be occurring because of the lack of resistance between $16k and the $20k all-time high. As such, there is an influx of traders betting aggressively on BTC hitting $20,000.
The 1-hour chart of Bitcoin. Source: BTCUSD on TradingView.com Bitcoin Showing High Volatility is Causing Ethereum and Altcoins to DwindleWhen Bitcoin rises, Ethereum and other altcoins are not increasing. But, when BTC falls, altcoins are falling in tandem with BTC.
This cycle has caused alternative cryptocurrencies to largely underperform against both Bitcoin and the U.S. dollar in the last 24 hours.
A pseudonymous trader known as “Bitcoin Jack” emphasized that BTC is seeing a similar cycle repeatedly. He wrote:
“When shorting whilst price is fighting a resistance, gets rejected by it, revisits it again, sweeps it get rejected again, sweeps it again, get rejected again, sweep it again and holds, without a convincing sell-off… Count your blessings it didn’t nuke you upwards to valhalla”
The lack of certainty in the direction of Bitcoin is leading the momentum of altcoins to decline.
A Top Formation Could Potentially be BrewingTechnical analysts and traders also suggest that a top formation could be brewing in the cryptocurrency market.
Bitcoin has been increasing rapidly since October without a major pullback. In previous bull cycles, BTC saw 20% to 30 corrections on a regular basis.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said it is early to describe BTC’s uptrend as a convincing move.
“Could be a top construction here on the markets. Not sure, but still not a convincing move to the upside on $BTC,” he explained.
The confluence of the extreme volatility of Bitcoin and the concerns regarding a potential top formation is amplifying the pressure on Ethereum and other altcoins.
The 1-hour price chart of Ethereum. Source: ETHUSD on TradingView.com ETH Outlook Remains Bright in Medium TermIn the medium to long term, however, the outlook of Ethereum remains positive.
In December, the ETH 2.0 mainnet is expected to launch, which would massively improve the scalability of the Ethereum blockchain network.
ETH has also been operating as the “ultimate value fungibility asset” on Ethereum, giving it more value as the overall user activity of Ethereum increases.
“To be more a bit more precise, $ETH is the ultimate value fungibility layer/asset on Ethereum. All roads/pairs connect to (and through) ETH, and with good reason. It’s the most liquid, secure, decentralized, and ubiquitously accepted asset on the platform,” a pseudonymous Ethereum analyst known as “Aftab.eth” said.
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