Altcoins are now active competitors in the cryptocurrency markets, offering investors a variety of options beyond Bitcoin’s dominance. Despite offering the leading cryptocurrency, Bitcoin, other alternative coins offer distinct opportunities for growth and innovation. Nevertheless, altcoin booms frequently experience setbacks, causing investors to question the factors that influence these fluctuations. This article examines the main reasons behind the delayed altcoins rally.
1. The geopolitical tensions in the Middle East
Altcoins’ performance can be affected by various external factors such as global market sentiment, geopolitical tensions and macroeconomic events. One overriding factor is the geopolitical tensions in the Middle East, specifically the escalating conflict between Israel and Iran that has affected the entire cryptocurrency market, including altcoins.
Usually, geopolitical conflicts cause uncertainties that lead to increased market volatility. Investors respond to such events by moving their assets to safer investment havens. Hence the declining demand for riskier digital assets such as altcoins.
In addition, geopolitical tensions could adversely affect investor sentiment. Concerns about increasing conflicts, cyber-attacks and economic sanctions could make investors more cautious, leading to a sell-off in the crypto market.
After the Middle East incidents, both Bitcoin and altcoins prices dropped significantly. For example, on April 13, Bitcoin price experienced a drop of more than 8.4%, after the attack of Iran on Israel. This led to the collapse of the global crypto market, which also affected altcoins.
2. Bitcoin’s dominance
Bitcoin dominates 53.21% of the cryptocurrency market, leading the market as the largest cryptocurrency by market capitalization. Investors may have become more wary of investing in altcoins and losing confidence in the broader crypto market, following the decline in value of Bitcoin, which has fallen 10% in the past month.
Since it is recognized as the most established cryptocurrency, the focus of investors tends to fix on BTC performance. This shifts capital and attention away from altcoins. When markets fall, there is a tendency to shy away from risks, which leads to a fall in the prices of altcoins compared to Bitcoin.
Moreover, when Bitcoin’s value falls, it limits new investments in the market and ignites a negative market sentiment, thus also affecting altcoins.
Historically, market circles have been dictated by the movement of BTC price, but currently the expected altcoin rally has been delayed due to the current BTC underperformance.
3. Market cycles and timing
The cryptocurrency market is known for its repeating patterns. Analysis of historical altcoin trends suggests that market cycles can lengthen, potentially causing delays in the emergence of rallies compared to earlier cycles.
Market cycles and timing play a crucial role in determining the performance and rally potential of altcoins. The ongoing pullback in the market has left many altcoin traders with heavy losses, with more than 85% of altcoins considered undervalued based on MVRV calculations. The market is waiting for the right timing to take advantage of these opportunities.
The altcoin market typically goes through phases during a bull market cycle, and it appears to be in the chop phase, characterized by uncertainty and re-accumulation post-Bitcoin halving event. The altcoin market mirrors the price movements seen in 2020-2021, although the timing is different, which can be attributed to the growth and innovation of the cryptocurrency industry.
The delay in the altcoin rally is related to the price fluctuations of BTC. This implies that altcoin season may be delayed until the ‘digital gold’ stabilizes in prices or reaches new highs, as claimed by CrediBULL Crypto.
#Altcoins 2016-2017 vs. #Altcoins 2021-2024
There’s not that much difference, is there?
It just takes longer than it used to. pic.twitter.com/F8ilHdEbFE
— 𝕄𝕦𝕃𝕃𝕒𝕒𝕖𝕖 🧲 (@el_crypto_prof) April 20, 2024
4. Market Manipulation and Whales
Cryptocurrency markets can be manipulated by influential holders, also called whales, who have a significant impact on price changes. Whales have the ability to influence the market by coordinating their purchases or sales, leading to manufactured fluctuations and slowing altcoin price increases. Furthermore, the existence of pump-and-dump schemes and insider trading intensify market manipulation, which hinders the natural development of altcoins.
Whales have a significant influence on altcoin prices through their selling pressure, which affects market sentiment and liquidity. Big sales by whales can delay expected rallies by causing sudden drops in prices and creating uncertainty. Conversely, strategic buying by whales can temporarily drive prices up, only to fall again when they sell. Whales can also spread fear or greed through the media, influencing traders’ decisions and causing volatile market behavior that slows down potential rallies.
For example, an unknown wallet transferred nearly 25 million XRP tokens worth $14.75 million to the cryptocurrency exchange Bitstamp on April 8, 2024. This large transfer caused speculation within the crypto community and was attributed to the subsequent price drop of XRP.
🚨 24,880,000 #XRP (14,752,878 USD) transferred from unknown wallet to #Bitstamphttps://t.co/wdX27lI223
— Whale Alert (@whale_alert) April 7, 2024
Closure
Although altcoins offer promising opportunities to diversify and invest, their rallies can be affected by different factors leading to possible delays and fluctuations. In order for investors to successfully navigate the volatile cryptocurrency landscape, it is crucial that they understand the fundamental factors behind altcoin rallies, such as market sentiment, regulatory uncertainty, technological advancements, and external market dynamics. By staying knowledgeable and doing proper research, investors can improve their chances of taking advantage of potential opportunities that altcoins present, while reducing risks associated with delayed rallies.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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