Brrrrr....
Something interesting happened today. Bitcoin went up 5.34% in fiat value while lots of altcoins bit the dust, losing both fiat...
...and BTC value; here in Ethereum:
...and in Litecoin:
See, during this Spring's altcoin bubble, altcoins' BTC and fiat value became correlated to BTC and started to increase together with BTC as Bitcoin was gaining in fiat value.
Here in Steem:
As I explained in this article though, this wasn't always the case.
Before the bubble, most altcoins were inversely correlated to BTC so that their BTC value would decrease everytime BTC would gain fiat value. This price action characterized the crypto markets for most of 2015 and 2016.
BTC/altcoins inverse correlation in Litecoin on the larger time frame
As I stated above, it now seems like the altcoin market is once again losing its correlation to Bitcoin.
Here's my analysis why:
last Spring's altcoin bubble was fueled by the FUD around Bitcoin's fundamentals, talks of a network disruption added to the ICO-mania led a lot of new money to buy into altcoins, hopeful they were investing into the next Bitcoin (Ethereum to the MOONN, Litecoin to the MOOON, ETC to the MOOON.... we heard it all);
now with the altcoin/ICO bubble seemingly over, Segwit about to deployed on the Bitcoin network and the prospect of the Lightning network, Bitcoin fundamentals are stronger than ever and confidence in Bitcoin might lead many to dump their altcoins for Bitcoin;
a massive Bitcoin bull-run could be extremely damaging for the altcoin market if altcoins were to lose their correlation to Bitcoin (in terms of their BTC value) because it could spell the beginning of an altcoin bear-trend;
if we're true to form, an altcoin bear-trend could last for months and lead to more dumping as the last of the dumb money is shaken out of the market and this would eventually affect altcoins' fiat value;
on top of this, there is further incentive to buy back into BTC because on August 1st anybody holding BTC will get to receive free Bitcoin cash (BCC) which currently trades at $217 a pop on futures market;
Bitcoin cash is not your typical garbage altcoin, it is supported by Jihan Wu, head of Bitmain (aka one of the biggest Bitcoin miners in the industry) and Roger Ver (aka the ex-future President of Bitcoin), these people are massive players in the Bitcoin market and could very well pump the price of BCC next month while attempting to crash the price of BTC to create FUD.
So here's my plan:
I've converted most of my altcoins into Bitcoin which I'll keep on my Ledger to receive my free BCC;
I am going to transfer cash onto some liquid exchanges to scoop up some cheap BTC if the price crashes because of some whales' shenanigans;
Finally, I am going to hold on to my BCC, possibly buy more if the price crashes and wait for the pump, which I am sure will come eventually.
PS: shout out to
for this smart strategy: you can also leave some BTC on exchanges to scoop up cheap altcoins before they recover after the fork.
And you, what is your plan for August 1st?
#cryptocurrency #bitcoin #steemit #steem
Trade safe guys, and please follow and upvote if you like the content.
