With Bitcoin’s price passing customs at Crypto La La Land on Jan. 7, 2020, the question on everyone’s lips (and by everyone, we mean those who sold at $19,000) is when will altcoin season begin? The few altcoin traders who stuck it out through 2018’s “crypto winter” (during which most altcoins lost up to 95 percent of their value) are crossing their frostbitten fingers.
The impact of Bitcoin on altcoins cannot be summed up in a single yes or no, and even the most basic assumptions are difficult to establish. Bitcoin’s price rise is accompanied by high trade volumes, drawing attention away from alternative assets. This is easy to see considering Bitcoin’s current market capitalization domination of 69 percent of the total market. The optimistic momentum generated by Bitcoin’s recent surge to a new all-time high was expected to eventually fuel a side-show bull run for other cryptocurrencies.
Only a few coins benefited from BTC’s 2020 Altcoin Lift
Bitcoin’s price eventually went beyond the fabled $20,000 barrier in late December 2020 and is currently hovering around $38,000. Last year, though, Bitcoin had a solitary voyage since, while it rose, most altcoins did not. However, it’s worth noting that the main altcoins, such as Ethereum, Litecoin, and XRP (at least until its SEC issues destroyed its price), all saw significant increases against the US dollar.
For a time in 2017, many people thought Ethereum would have been the first cryptocurrency to outperform Bitcoin. It never took place though. ETH, on the other hand, continued to lose value until early 2020. In 2020, Ethereum took a bit to get going, but it eventually picked up steam in the fourth quarter owing to the historic introduction of the Beacon Chain, which kicked off the much-anticipated migration to Ethereum 2.0, and Bitcoin crossing the promised land of $20,000 for the first time. Since then, Ethereum has sailed past $1,000 with a hop, skip, and a jump, and is now aiming for its all-time high price of $1,400 set in 2017.
The price of Ripple’s XRP has been trending in the same direction as Ethereum’s. On Jan. 4, 2018, the cryptocurrency hit an all-time high of $3.84 before plummeting to under 12 cents over the course of the year.
Ethereum Remains the Altcoin Gatekeeper
The price of Ether is significant because, aside from Bitcoin, it is one of the most trusted cryptocurrencies and a key indicator of upcoming price action. Because it effectively pioneered both the 2017 ICO bubble and the emergence of the young, decentralized finance (DeFi) industry in 2020, Ethereum claims to be the most trusted altcoin in the space.
Can Altcoins Lift BTC?
The answer is simple. This does not happen very often. Altcoins are rarely used to enhance Bitcoin’s price. When Facebook revealed its Libra project in mid-2019, Bitcoin was widely expected to be the greatest winner, with a boom in public interest in cryptocurrencies. Libra (now Diem) drew a lot of attention to the crypto market, which helped Bitcoin, which was the most well-known digital asset at the time. The bulk of cryptocurrencies, on the other hand, saw significant price decreases as Libra’s consortium of blue-chip partners represented established giants in the areas that altcoins claimed to be disrupting.
BTC’s Lift on Altcoins: Hope for the Future
Institutional players are entering the market as a result of the business’s many booms and busts. They are placing a large bet on Bitcoin and a smaller stake on altcoins. This maintains Bitcoin’s positive momentum. BTC will take some time to properly elevate altcoins.
Ethereum, the silver to Bitcoin’s gold, is the altcoin market’s ray of hope. The emergence of bullish momentum for Ethereum could signal the start of the cryptocurrency season. With Ethereum now firing on all decentralized networks, altcoins face an uphill battle to catch up and reclaim some of Bitcoin’s market dominance.
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