A cryptocurrency bull market is a time of high price movement. Getting in and out of the market at the right time can make a huge difference, so this is also one of the most difficult procedures. Some coins remain more volatile than the others, so the same approach cannot be taken for every asset. Understanding the market landscape of Bitcoin, Ethereum, and other altcoins is of paramount importance as sometimes the bullish nature of one major asset can determine that of the other.
Bitcoin: dictator of major trends?
There is no doubt that Bitcoin is in charge of the market. March 2020 is a prime example of the decline in BTC being followed by every asset in the industry. Now the hodling doesn’t require specific timing of the market as long as a person will hold BTC for a long time. But even for short-term traders, the timing of the BTC market has become relatively easier.
Factors include its prevalence and adoption in recent months. Bitcoin is currently less prone to massive price drops as both institutions and high net worth individuals buy BTC.
From a fundamental direction in the chain, the profit-output win ratio has been key to Bitcoin trends.
Source: Twitter
To track a change in trend, SOPR helps determine the profit-taking of long-term investors, thus identifying the new demand for the asset. Similarly, tracking the whale movement is also important for Bitcoin as it defines a potential area for support and resistance. The timing of the Bitcoin market was flexible this time as the growth was gradual and steady.
Ethereum: more than what the eye sees?
Ethereum and Bitcoin shared a sequential rally in 2021. It was a case of “After You” on the part of ETH at every significant step of Bitcoin. However, Ethereum had more control over the current rally. This is where the ETH / BTC chart comes into play.
Source: Twitter
The popular crypto analyst TraderXO has made the importance of the ETH / BTC charts clear in the past. A higher price movement usually allows Ether to move into smaller altcoins, which triggers the rally for these small capitalization assets.
Another important measure of the price movement of ether in 2021 is the determination of exchange rate outflows / inflows. After the start of the ETH 2.0, several whale traders started to operate the ETH over the counter, which leads to a relatively higher demand.
Source: Twitter
Altcoins: Depending on BTC and ETH or not?
A little of both. Timing an entry or exit for altcoins is the most difficult as these markets have the least liquidity. Hence, it is always safe to target altcoins that have a basic connection to Bitcoin or Ethereum. For example, a Bitcoin pump always leads the rally for assets like Bitcoin Cash, Litecoin, DASH, and Monero.
Similarly, Ether’s rise in price allows the project based on its blockchain to thrive. Some projects like Cardano and Polkadot have relied more heavily on development lately, which is a positive sign of their individual performance.
In addition, the volume of trades on the exchanges is of great importance as it can easily be used to understand whether the market will trend up or down in the event of aggressive volatility.
XRP: against the whole market?
Source: Coinmetrics
Since the end of last year, XRP has shown a significantly low correlation with Bitcoin. It wasn’t until last month that this indicated a spike as XRP rose sharply in the market. Therefore, with the ongoing lawsuit with the SEC, it is currently the most difficult to plan an entry and exit for XRP. It is helpful to keep an eye on market sentiment as XRP has one of the most loyal communities out there. Overall, short-term trading in XRP is currently riskier than the other altcoins.
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