Bitcoin’s Surge Means Smaller Rivals May Be Due for Rallies

In the crypto world, Bitcoin continues to reign supreme.

The largest digital asset is outperforming the next three biggest alternatives this year. It’s managed to hold above the key $10,000 level in the face of increasing headwinds. In times of recent market turbulence, it’s even taken on somewhat of a safe-haven accreditation.

But technical indicators show the price action between Bitcoin and alternative tokens is nearing its highest correlation this year, indicating that a so-called alt season may be on the horizon. Alternative coin prices appear to be mimicking Bitcoin nearly one-to-one, with the highest correlation happening between Bitcoin and Ether, according to data compiled by Bloomberg.

The correlation can be “attributed to the consolidation pattern we have seen in the crypto space,” said Ed Moya, Chief Market Strategist at OANDA Corp. “Volatility has eased quite a bit over the past couple of weeks as regulatory concerns and future hurdles have somewhat eased.”

Cryptocurrencies have rallied across the board this year thanks to expectations of greater institutional adoption and plans by Facebook Inc. to launch its own stablecoin. Bitcoin has gained about 175% in 2019, outperforming tokens including Litecoin, up close to 150%, and Bitcoin Cash, which has more than doubled. Ether has gained about 40% in that period.

Bitcoin’s outperformance can be tied to its overall dominance, which has increased to levels not seen since April 2017, according to Ryan Alfred, president of Digital Assets Data, a data platform. The trend could indicate a consolidation in the crypto space of money from alt coins flowing into Bitcoin. The correlation may be short-lived, he said.

CoinCorner, a crypto exchange, is seeing a similar trend. More than 90% of the company’s customer transactions are related to Bitcoin. Ethereum, Litecoin and Ripple make up about 7%, said Danny Scott, the firm’s chief executive officer.

“Altcoins are slowly dying out in respect of interest when compared to Bitcoin,” he said. “As always in this industry, it eventually comes back to Bitcoin.”

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya