BTC is sucking blood, when will the altcoins reach a turning point?

In the past few days, the atmosphere of the community has been in stark contrast to the Bitcoin bull market.

The price of Bitcoin continues to break new highs. According to Huobi BTC spot data, the price of Bitcoin is approaching 16,000 US dollars, a record high in recent years. For everyone, BTC's continuous record highs does not seem to be a good thing, because in the domestic currency circle, the vast majority of people hold altcoins. BTC is only 30% away from its historical high of 20,000 US dollars, but what about altcoins?

In this BTC bloodsucking market, the BTC faction in the community has the upper hand, and the altcoins have been devalued to the point of being completely destroyed. It is believed that only by holding BTC can you make money, and altcoins will die out in this bull market and will never break through the historical highs. In the face of BTC's rising prices, whether to sell altcoins and switch to BTC has become a hot topic in the market.

1. Why is BTC sucking blood?

First of all, it is definitely not retail investors who are buying, but mainly institutional buyers, which is also the biggest difference between this year's market and previous periods. So, why do institutions prefer to buy BTC?

BTC has performed much better than the altcoin market recently. This round of BTC market is not driven by funds in the market, nor by technology. This wave of Bitcoin's rise has nothing to do with the currency circle, but institutional investors are increasing their holdings of Bitcoin. Institutions value Bitcoin's consensus strength, asset attributes, and broad community advantages. Currently, only BTC's market value can accommodate institutional funds.

The core logic of institutional coin selection: light technology attributes, heavy asset attributes

Take the most famous Grayscale Capital as an example. Grayscale's currency trusts include BTC, BCH, ETH, ETC, ZEN, LTC, XLM, XRP, and ZEC. Did you notice that Grayscale's currency selection does not include innovative technology coins such as DOT and ATOM? In our opinion, the currency selection style is very conservative, but Grayscale Capital's currency selection has a characteristic, that is, these coins have been developed for a long time, the community is relatively mature and extensive, and the consensus foundation is solid.

Therefore, institutions do not focus on technical attributes, but instead choose assets with the weakest technical attributes but the strongest asset attributes.

2. BTC vs. Altcoins

BTC’s irreplaceable nature:

As the pioneer, BTC is not as good as the altcoins that emerged later in terms of technology, but BTC wins in terms of first-mover advantage, community size, commercial applications, path dependence, etc. BTC has gathered the largest computing power in the entire network. Computing power is power. Any altcoin is nothing in front of Bitcoin's huge computing power. Therefore, even if the altcoins of later generations are far superior to BTC in technology, it is difficult for them to form competitiveness, let alone threaten the status of Bitcoin.

To borrow a metaphor from Chang Qia, "The difference between Bitcoin and altcoins is like the difference between the Internet and a local area network. I can't imagine that anyone can reinvent the Internet."

The infinite vitality of altcoins:

The extensible areas of blockchain are very broad. Only relying on BTC cannot activate the potential of blockchain. For example, the early altcoin ETH was completely looked down upon by BTC valuers at first, but ETH's smart contracts have had a more far-reaching impact. For example, the popular DeFi this year was born from ETH, and the BTC network cannot breed these applications. It can be said that BTC has changed the world of currency, but ETH has changed the world of finance, providing unlimited possibilities for reconstructing the existing business model.

Therefore, BTC and altcoins are not in absolute conflict and can coexist. Bitcoin, as the pioneer, and the subsequent altcoins are in a symbiotic and complementary relationship, not competition. Bitcoin itself cannot fully stimulate the potential of blockchain and needs the latter to extend and expand. Altcoins cannot replace BTC, but there are always opportunities in the altcoin market and there are always hot selling points.

3. The Rotational Relationship between BTC and Altcoins

From the historical relationship between BTC and altcoins, every time the cryptocurrency market enters the early stages of a bull market, BTC always rebounds first. On average, Bitcoin's rise alone lasts for about six months. Soon, the altcoin market will catch up. During the catch-up period, the growth of altcoins exceeds that of BTC in most cases. This is the case in every bull market, and history repeats itself.

From the perspective of capital rotation logic:

It is common sense that BTC cannot keep rising. Due to its large size, it cannot keep rising like small currencies. It will inevitably reach the limit of the stage of rising. Once the rising space is blocked and the volatility is reduced, the hot money in the market will naturally flow into the altcoin market. This is the inevitable order of capital rotation.

Looking at the turning point of the altcoin market from the perspective of BTC market share:

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This picture is the market share of BTC. By drawing the line, we can see that BTC's market share has reached a critical point. Corresponding to the time, we can see that the first two times it was touched triggered a frenzy for altcoins. Altcoins entered a period of chasing up, and BTC's market share began to decline.

Obviously, this time the BTC market share trend has touched this line again. If the BTC market share begins to decline afterwards, the turning point of the altcoin market has arrived, and it seems that the altcoin carnival is on the way.

IV. Conclusion

The altcoin market will never die, but you may be destroyed. The altcoin market comes fast and goes fast, and it will inevitably end with a lot of corpses. This is a tragedy and joy drama in which the miracle of wealth and the tragedy of life coexist.