Altcoins plummeted sharply on February 14, after the Bitcoin (BTC) price hit a new record high above $ 49,000.
The timing of the downturn in the altcoin market was notable because it was corrected while BTC was recovering, which it normally does not.
So why exactly did altcoins break?
There are two main reasons why the altcoin market has retreated, despite the strength of the dominant cryptocurrency.
First, when Bitcoin’s price hit a new high, it sucked most of the volume out of the cryptocurrency market. This naturally caused the market to swing towards BTC, contributing to the retraction of altcoins.
Second, Ether (ETH), which often leads the momentum in the altcoin market, has fallen dramatically compared to Bitcoin.
The combination of these two factors, combined with the uncertainty surrounding Bitcoin at the $ 50,000 resistance level, amplified the selling pressure in the altcoin market.
A broker pseudonym known as “Kaleo” emphasized that predicting Bitcoin’s rise to $ 50,000 was undoubtedly simple.
But whether BTC exceeds $ 50,000 remains an important issue that would decide the direction of the crypto market’s short-term price cycle. He said:
“So this move to just under $ 50,000 was incredibly easy to spot. The real question is what happens next. I am inclined to a brief consolidation and to leave the interval, but I am undecided. How long is it going to take? Is it rejected? I do not know.”
If Bitcoin consolidates first before exceeding $ 50,000, theoretically, this trend would likely benefit altcoins in the foreseeable future.
During a bullish trend for Bitcoin, altcoins tend to increase when BTC is consolidating after an initial momentum recovery. However, when BTC is recovering or experiencing a slight downturn, altcoins tend to experience large price drops against BTC and the US dollar.
Bitcoin is optimistic for now, which is useful for alts
For now, Bitcoin is maintaining its optimistic market structure, which would ease some of the selling pressure in the altcoin market in the foreseeable future.
Scott Melker, a cryptocurrency trader and analyst, said that Bitcoin continues to see consecutive bullish flags.
Bull flags are a market structure under technical analysis that materializes when the asset expands after consolidation in an interval.
This usually demonstrates a ladder rally that is sustainable in the long run. Melker said:
“Little flags everywhere. It finally closed above $ 48,200 after 7 rejections. Consolidation below resistance generally leads to a disruption. “
As long as Bitcoin defends the recently established support area of $ 48,200 and consolidates between $ 48,200 and $ 49,700, another break is more likely.
If Bitcoin sees another breakout, this time, the altcoin market will likely rebound together with Bitcoin after seeing an initial drop in BTC’s first bullish momentum.