Bitcoin price may be favorable for altcoins before it breaks $50,000

Original title: "Bitcoin price approaches $50,000, but altcoin prices fall. Why?"

Original source: Cointelegraph Chinese

On February 14, the price of Bitcoin ( BTC ) hit a new all-time high of over $49,000, followed by altcoins falling sharply.

The timing of the altcoin market’s pullback is noteworthy because it corrected as Bitcoin was rising, which doesn’t usually happen.

Why did altcoins collapse?

Despite the strong gains in the dominant Bitcoin, the altcoin market has retreated for two main reasons.

First, when the price of Bitcoin rallied to record highs, it sucked away most of the volume from the cryptocurrency market. This naturally led to a market shift toward Bitcoin, causing altcoins to pull back.

Secondly, Ethereum ( ETH ), which often leads the altcoin market, saw a sharp drop in the price of its ETH/BTC trading pair.

BTC/USD vs. ETH/BTC (orange line) 1-hour candlestick chart Source: Tradingview

These two factors combined with the uncertainty surrounding Bitcoin’s resistance at $50,000 have increased selling pressure in the altcoin market.

Anonymous trader “Kaleo” stressed that predicting Bitcoin’s rise to $50,000 is easy.

However, whether Bitcoin breaks through $50,000 remains an important question that will determine the direction of the crypto market’s near-term price cycle. He said:

“So it’s very easy for Bitcoin to go just below $50,000. The real question is what happens next. I think there will be short-term consolidation and a breakout from the range, but I’m not sure yet. How long will it take? Will it get rejected? I don’t know.”

If Bitcoin consolidates before breaking out above $50,000, this trend could theoretically benefit altcoins for the foreseeable future.

During Bitcoin’s uptrend, when Bitcoin is consolidating after its initial impulsive rise, altcoins tend to surge. However, when Bitcoin is rising or experiencing a minor pullback, altcoin prices tend to fall sharply against both Bitcoin and the U.S. dollar.

Bitcoin is currently bullish, which is good for altcoins

Currently, Bitcoin still maintains a bullish market structure, which will alleviate some of the selling pressure in the altcoin market for the foreseeable future.

Cryptocurrency trader and analyst Scott Melker said Bitcoin will continue to move out of the consecutive bull flags.

Bitcoin bull flag. Source: Scott Melker, TradingView.com

A Bitcoin bull flag is a market structure in technical analysis that occurs when Bitcoin breaks out after consolidating within a range.

The bull flag shows a classic step-by-step rise that is sustainable in the long term. Melker said:

“Bull flags everywhere. Bitcoin finally closed above $48,200 after being rejected 7 times. Consolidation below resistance usually leads to a breakdown.”

As long as Bitcoin holds the newly established support at $48,200 and consolidates between $48,200 and $49,700, another breakout becomes more likely.

If Bitcoin breaks out again, this time, the altcoin market could rise along with Bitcoin after an initial dip in its first impulsive rally.