The altcoin market collapsed when Bitcoin hit a new all-time peak and made its way to $50,000.
Altcoins plummeted steeply on Feb. 14 after the price of Bitcoin (BTC) hit a new all-time high above $49,000.
The timing of the fall in the altcoin market was notable because it was reversed when BTC was rallying, which normally doesn’t happen.
So why exactly did altcoins crash?
There are two key explanations why the altcoin market has pulled back from the power of the dominant cryptocurrency.
Second, when Bitcoin’s price hit a new record high, it drained out much of the volume in the cryptocurrency sector. This inevitably prompted the demand to change to BTC, which led to the decline of altcoins.
Second, Ether (ETH), which sometimes leads the altcoin sector, dropped dramatically against Bitcoin.
The combination of these two factors, combined with the volatility around Bitcoin at the $50,000 resistance stage, has intensified the sales pressure on the altcoin market.
A pseudonymous trader known as “Kaleo” stressed that forecasting Bitcoin’s $50,000 rally was possibly straightforward.
But if BTC breaks past $50,000 remains a significant question that will define the course of the near-term price cycle of the crypto market.
“So this move up to just under $50K was incredibly easy to spot. The real question is what happens next. I’m leaning toward brief consolidation and breaking out of the range, but I’m undecided. How long will it take? Does it get rejected? Idk.”
If Bitcoin consolidates first before breaking out of $50,000, potentially, this pattern is likely to favour altcoins in the near future.
During the uptrend of Bitcoin, altcoins begin to increase as BTC consolidates after the initial pulse rally. However, when BTC is rallying or having a minor pullback, altcoins also see significant price drops against both BTC and U.S. dollars.
Bitcoin is bullish for now, which is helpful for alts
For now, Bitcoin is preserving its bullish trading structure, which will alleviate some of the selling pressure on the altcoin market in the near future.
Scott Melker, a cryptocurrency trader and analyst, said that Bitcoin continues to see successive bull flags.
Bull flags are a market structure in the technical analysis that materialises when the asset breaks out after being consolidated within a range.
This is indicative of a stairway-like rally that is sustainable over the longer term.
“Little bull flags everywhere. Finally closed above $48,200 after 7 rejections. Consolidation below resistance usually leads to a break up.”
As long as Bitcoin protects the recently formed $48,200 support area and consolidates between $48,200 and $49,700, another breakout is more likely.
If Bitcoin sees another breakout, the altcoin market is expected to recover in tandem with Bitcoin after seeing an initial dip on BTC’s first pulse rally.
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