While the price of Bitcoin (BTC) continues to meet resistance around the $ 56,000 – $ 58,000 levels, the altcoin market has taken the lead. For example, Ethereum hit an all-time high of $ 3K, and Binance Coin rose above $ 660 for the first time. Basically, the price increase applies to almost all altcoins from the top 100. The list is topped by the weekly winner Waves (WAVES), with prices rising 41% per day.
In general, over the past 2 months, the altcoin market has increased its value by 119%.
Thus, altcoins are ahead of Bitcoin at the moment. It follows from this that investors are starting to shift capital from the main cryptocurrency to lesser-known coins.
The experts explained if the altcoin season is really here and what it means for the crypto market.
It was possible to talk about the season of altcoins and the season of Bitcoin earlier. Since then retail investors dominated the crypto market, experts say. The situation is much more complicated now, they said, as there is a “big chasm” between the behavior of retail and institutional investors. Institutions still prefer the most stable coins, where the risks of complete depreciation are below average. These are Bitcoin and Ethereum.
Among retail investors, panic and emotional decisions dominate. So, many rushed to redistribute assets from Bitcoin to altcoins, which have a higher risk of depreciation, but also have a higher chance of making multiple profits. Experts note that retail investors are more willing to invest in riskier assets than institutional investors.
Institutional investors are in no hurry to get rid of purchased Bitcoins. They wouldn’t sell the asset when it sank, since these are emotional decisions that characterize novice retail investors, not professional traders or large asset managers.
“Institutionals will hold Bitcoin until they see the return they want,” the experts add.
If the portfolio is well diversified and risks are hedged in the futures market, then there is no point in selling Bitcoin at all.
Decreased dominance of Bitcoin
Bitcoin’s dominance is declining in the long term, and this is happening not only due to the growth of altcoins from the top 20. Also as a result of a general dilution of shares, against the backdrop of a steadily growing DeFi segment.
This situation we can’t call a full-fledged season of altcoins, since during the last season of altcoins, the dominance of Bitcoin decreased by half from more than 80% below 40% in less than 4 months. But now there is a decrease in the share within 10%, which fits well into the standard market cycles. According to experts, in the coming weeks, the altcoin market will continue to grow faster than the first cryptocurrency, but the opposite is also natural.
It is likely that there will be a redistribution of capital from altcoins back to Bitcoin. Which will be able to break through the psychological level of $ 100 thousand at the end of the summer. It will provoke investors to re-transfer capital to the first cryptocurrency.