Ethereum (ETH), one of the big altcoins, lags behind the crypto money giant Bitcoin. Historically, when BTC fluctuates, altcoins take an upward trend with larger upside price movements.
This time around, Bitcoin clearly outperformed the altcoin market, especially in December. BTC’s market value dominance rose to a recent one-year high of 70%, largely due to large sales in XRP last week.
Price discovery is when the price of an asset exceeds the previous high and continues to enter the unplanned zone. Bitcoin has been on such a path of discovery lately. Altcoins often become stagnant when Bitcoin goes into price discovery because BTC is absorbing the volume in the altcoin market.
Moreover, while Bitcoin is rising rapidly, it also tends to short-term retracements. The problem for altcoins is that when BTC rises it falls behind BTC and altcoins typically see even bigger corrections when BTC retracts.
It is critical for the altcoin market to see Etherum gain momentum against Bitcoin. If it occurs in the near term, this will likely start the next altcoin season.
At the moment, Ethereum is still underperforming against Bitcoin. The ETH / BTC pair still shows no signs of a breakout.
When Will Altcoins Become Attractive?
Indeed, there is a strong argument that the so-called “altcoin season” may not appear in the 1st quarter of 2021.
Some analysts point out that profits from BTC will not return to the altcoin market this time around, as Bitcoin sees a rally led by institutional investors.
However, some traders also expect altcoins to become more attractive in Bitcoin rallies.
An anonymous trader named “Salsa Tequila” stated that after BTC peaked in December, capital could turn into altcoins if it continued to fluctuate.