Altcoin traders and investors should look for cover if Bitcoin (BTC) undergoes major price declines.
So believes Filbfilb, an independent market analyst and co-founder of Decentrader trading suite. In a tweet published late Friday, the pseudonymous entity said a 30% crash in the Bitcoin market could prompt altcoins to drop twice as harder.
When Bitcoin consolidated between $50,000 and $60,000 in the March-May period, altcoins exploded. Similarly, the recent correction in the Bitcoin market, which witnessed the flagship cryptocurrency falling from circa $65,000 to as low as $28,000, also had altcoins crash; still, to the levels, they held as support when Bitcoin was stuck in the $50K-$60K range.
Filbfilb noted that altcoins have been facing a so-called “catchup risk,” hinting that even a small downside shift in the Bitcoin market could move altcoins twice lower. The statement appeared as Bitcoin prices plunged to $30,173 following a 15.58% week-to-date downside correction.
“[Altcoins], therefore, carry significantly more downside risk than Bitcoin with [BTC/USD] threatening lows,” tweeted Filbfilb. “If bitcoin were to fall lower, losing another 30% worst case, I’d expect [altcoins] to correct to do 2x worse from here.”
“If bitcoin were to fall lower, losing another 30% worst case, I’d expect alts to correct to do 2x worse from here.”
Bitcoin’s declines across May and June pushed down its year-to-date performance to 5.71%. Meanwhile, while top-cap altcoins fell in tandem, their YTD returns fared far better.
For instance, Ether (ETH), the second-largest cryptocurrency, dropped by a little over 60% from its mid-April peak of $4,384. Nevertheless, its YTD returns came out to be 141% as of publishing time. Similarly, Dogecoin’s YTD profits were 4,112% even after falling by almost 80% from its record high of $0.76.
So it seems, altcoins provided better…