Twitter cryptanalyst expect Altcoin prices will be muted in the second half of 2023. The data indicates that the fate of altcoins and the possibility of an “alt season” is highly dependent on the performance of Bitcoin.
Being the first and market leading cryptocurrency, according to CoinMarketCap dataThe impact of Bitcoin on digital currencies cannot be underestimated.
Altcoins in the accumulation phase, waiting for bitcoin?
In his assessment, altcoins are currently in the “accumulation phase,” which has kept the sector at a market cap of between $290 billion and $460 billion over the past few trading months. This trend is expected to continue into next year, when bitcoin is expected to halve the reward to 3.125 BTC.
Given the performance of Bitcoin after the previous halving events, the cryptocurrency could see more gains as the event approaches. This, in turn, given the direct relationship between Bitcoin and altcoins, is likely to lead to “altcoin season.”
To enhance his market preview, he shared a screenshot depicting the total market cap of altcoins excluding Bitcoin and Ethereum, revealing extended periods of sideways trading during previous bear markets. As an extension of this view, the analyst expects altcoin price movements to be limited even after the halving event, as shown in the chart below.
Historically, bitcoin rallies have tended to support altcoins, a trend observed in recent cycles. Altcoin’s relatively thin liquidity often results in price gains that outpace the more liquid BTC. Conversely, whenever bitcoin prices collapse, cryptocurrencies tend to collapse faster.
Most altcoins are weak?
In recent months, bitcoin has been strong, rising 80% in the first half of 2023 after prices bottomed out in late 2022. On the other hand, despite the direct correlation, most altcoins have remained subdued, falling from highs 2021.
To be clear, coins such as ADA, SOL, DOGE, ALGO, and others are down nearly 85% from their 2021 peaks and remain under pressure as of July 10 writing.
The US Securities and Exchange Commission (SEC) recently alleged that several altcoins, including SOL and ADA, are securities, a comment that saw prices dump in June.
The only ban among altcoins is XRP. Optimism in the ongoing legal battle between Ripple and the Securities and Exchange Commission has supported the currency, forcing prices to diverge from other currencies. However, the final verdict is likely to significantly affect prices and volatility. Currently, XRP is trading below $0.50 but is up about 45% from its 2022 lows and is strong, and is trading in a bullish formation above $0.45.
XRP is likely to rise if the positive verdict supports Ripple’s assertion that XRP, a currency they use on their On-Demand Liquidity (ODL) platform, is not a security but a utility like Bitcoin. A ruling in support of the Securities and Exchange Commission could lead to a sell-off, possibly wiping out recent gains.
Featured image from Canva, chart from TradingView
