Why This VC Expects Altcoins to Boom as Bitcoin Rally Enters an “Extreme”
It’s no secret that Bitcoin’s recent parabolic rally has done little in the way of providing tailwinds for altcoins, with many seeing devastating losses against BTC as their growth stagnates.
This isn’t unprecedented, as past bull runs have followed a similar path, with BTC leading the way and rallying independent of the rest of the market, followed by a capital rotation event that sends altcoins flying as BTC drifts lower or consolidates.
There’s a strong possibility that this will happen again in the future, but it only remains a question of how long Bitcoin will rally and how high it will go before altcoins can gain some momentum.
One venture capitalist believes that the market is nearing the point at which a rotation from BTC and towards altcoins will occur.
He notes that sentiment surrounding Bitcoin can be characterized as no less than “general greed & fomo,” noting that this could be emblematic of a local high.
He also notes that altcoins have been undergoing sheer capitulation as their investors chase after the Bitcoin rally, which typically occurs just before these tokens boom.
Bitcoin Rally Puts Altcoin Holders on Edge
Bitcoin has been relentlessly climbing throughout the past few days and weeks, with its ascent even catching its most loyal supporters off-guard.
A combination of mounting retail demand and institutional demand is the likely suspect behind this rally, which has caused its price to run from multi-month lows of under $10,000 to highs of nearly $30,000 that were set last night.
This rally has not been too friendly to altcoins, as most have declined significantly on their BTC trading pairs over the past few months.
This has created a generally negative sentiment around altcoins and has also sparked some capitulation.
VC Claims Altcoins are About to Boom
Matt Kaye, crypto-focused venture capitalist at Blockhead Capital, explained in a recent tweet that he is slowly converting his Bitcoin to altcoins, noting that he expects an imminent flood of capital away from BTC and towards its smaller peers.
“I’ve starting selling BTC for alts over the past 7 days and will continue to. The extreme nature of this period is why. I’m betting on: – Extreme mrkt positioning – General greed & fomo – ALTs being under owned as holders capitulate for BTC – Cyclical nature of the market.”
If this transition from Bitcoin to altcoins does occur, it will confirm a trend seen during countless other crypto bulls markets, where altcoins strength is inversely correlated with BTC’s.
Featured image from Unsplash. Price data from TradingView.