After a brief, couple day rally, altcoins have been selling off hard.
The price of steem was all the way up near $1.66 and is now trading in the low $1.40's.
This wouldn't be all that unusual regarding cryptocurrency volatility except that bitcoin is making new short term highs as I type.
Bitcoin just recently spiked up over $7,600.
Bitcoin continues to surge ahead while steem and the rest of the altcoin market is selling off... what gives?
Bitcoin surging is precisely the problem.
When the crypto rally began a few days back, everything went up as new money likely entered the space and short covering boosted prices.
However, when it became clear that much of the bitcoin rally had to do with the possible approval of a bitcoin ETF, money soon flowed out of altcoins and into bitcoin.
People want to ride the ETF momentum and make as much as the can on the coin that is likely to go up in the near term, which is bitcoin.
Therefore, the current strength in bitcoin is coming at the expense of every other coin.
Money is slaushing around from within the crypo space as opposed to new money coming in.
Bitcoin's dominance is now sitting north of 45%, the highest level since December of last year.
We saw this phenomenon several times in 2017 as well.
When bitcoin starts running up, the question always becomes; will it pull altcoins up with it or will it pull money out of altcoins?
Currently it appears to be the latter.
Last year we saw this happen on two different occasions surrounding hard forks of the bitcoin code.
The pain in the altcoin space was severe.
Hopefully we are not about to see something similar repeat this year.
Having bitcoin run up is great for the space as it is the one that attracts all the new money and gets talked about in the press, however, it's not so great when it crushes our beloved altcoins in the process.
Stay informed my friends.
Image Source:
https://steemkr.com/cryptocurrency/@aakashsinha/it-s-getting-worse-the-crypto-currency-blood-bath
