In the early hours of Monday, cryptocurrency markets suffered significant declines, led by major assets such as Bitcoin (BTC) and Ethereum (ETH). Bitcoin has formed a double high near $44,500 and is showing a bearish daily Relative Strength Index (RSI), hinting at a potential shift to an altcoin-dominated market in the coming weeks.
Buckle up and dive into this analysis as we explore the factors behind the crash, the potential rise of altcoins, and what this means for the future of cryptocurrencies.
Bearish sentiment surges
Recent market data from Coinglass shows a stark contrast in trader activity, with more than $354 million of long-term cryptocurrency traders liquidated in the last 24 hours. This is in stark contrast to just $54 million for short-term traders. This surge in long-term liquidations signals growing bearish sentiment. This follows Bitcoin’s recent bullish pennant pattern, where it fell to $40,000 despite many expecting it to surge to $48,000.
Regulatory crackdown increases pressure
Despite the ongoing cryptocurrency regulatory crackdown in the United States, market experts remain optimistic in the short term, anticipating the approval of several spot cryptocurrency exchange-traded funds (ETFs). This potential development could increase cash inflows into the cryptocurrency market, strengthening bullish momentum despite the current bearish trend.
Read more: High Alert for Cryptocurrencies: Is Bitcoin ETF Delayed? Expert Hints for January Roadblocks
Passion for altcoins is growing
Santiment, an on-chain analytics platform, has seen a noticeable surge in social media mentions urging followers to ‘buy the dip’. This indicates the community’s strong belief in the imminent recovery and growth of altcoins. The possibility of a reversal in Bitcoin dominance from around 54% to retesting support levels around 40% further strengthens the bullish narrative for the altcoin.
A game waiting for the ‘alt season’
High demand from institutional fund managers for cryptocurrency investment products appears to be another factor that could sustain market optimism. The much-anticipated ‘alt season’ could materialize in the coming weeks as market capitalization trends lead to a reallocation of cryptocurrency cash flows from Bitcoin to the altcoin industry.
Also Read: Is a ‘Santa Rally’ Coming? Top 5 Altcoins to Stock Up This Holiday Season
Altcoins are ready to take center stage, unlocking new opportunities for traders and investors. The cryptocurrency market, known for its volatility, has once again proven itself to be a realm of unexpected changes and exciting possibilities.
What altcoin are you most excited for this holiday season?