Bitcoin’s halving is less than 2600 blocks away from its block reward halving setting an impatient mood across the cryptocurrency world. Debates are raging on what direction the price of BTC will take following the halving event, the ongoing COVID-19 effects on miners, and how the miners will react to the reduction in revenue.
Notwithstanding, investors are heavily focused on Bitcoin’s price and other cryptocurrencies and how they will react in the coming days. Bitcoin’s dominance, in particular, has been on a downward spiral in the past few weeks as altcoins such as Ethereum (ETH), Chainlink (LINK) and Tezos (XTZ) heavily outperformed the top coin.
However, heading into the halving an analyst believes investors should be careful in their positions in altcoins with Bitcoin expected to twist the tide in the market. A Twitter-based trader, Pentoshi, wrote on Sunday,
“I’m reducing my alt exposure by 75%. My focus will be on $BTC.”
He went on to discuss the reasons behind this bold statement that received mixed to negative reactions from other market participants.
Can altcoin overshadow BTC’s Price into halving 2020?
According to Pentoshi, Bitcoin offers three major reasons for its power over altcoins following the halving event.
1. Bitcoin’s dominance is unmatchable
First, Bitcoin controls the majority of the crypto markets with over 65% dominance of the total crypto market cap. Looking at the historical price charts (Mar.12 being the latest example) a sharp rise or fall in BTC’s market usually correlates with an upturn or drowning of other crypto assets. A huge pump in BTC’s price may cause a selloff into BTC’s market and a large dump in BTC price causing a dump in alts.
I’m reducing my alt exposure by 75%. My focus will be on $BTC and here’s why.
1. The halving nears. If BTC pumps, alts get rekt. If it dumps, alts get rekt.
2. #alts are just a game of musical chairs and the music always stops. I don’t want to give
— Pentoshi (@Pentosh1) April 25, 2020
2. Opening of new CME Futures
Secondly, the opening of new CME Bitcoin Futures contracts this month, following Friday’s expiration of April futures combined with an upcoming halving event also gives Bitcoin an upper hand to other altcoins. Institutional investment is expected to be on a Further, he describes the altcoin market as a game of musical chairs, whereby some may succeed but most will fall on the way.
signal the end of a cycle.
4. I might miss some pumps. That’s fine. This market provides new opportunities daily. Opportunities don’t ever stop if you have gun powder on hand. Being over-exposed to alts at this inflection point, seems risky. The ending has been the same every
— Pentoshi (@Pentosh1) April 25, 2020
3. The Fibonacci 0.618 resistance signal, May Trigger An Altcoin Reversal
Finally, Pentoshi touched on the technical aspect of Bitcoin’s price relative to altcoins. In the past few days, top altcoins have rallied against BTC, as the top coin followed the market. Looking at the charts since the bullish run of 2017, altcoin pumps have been closely following BTC/USD run towards the 61.8% Fib resistance level.
Now that alts are still pumping and BTC is on a target to higher resistance levels, altcoins may have set its ceiling and may be set for reversal heading into halving.
A case for altcoins over BTC
However, several skeptics replied making a case for altcoins heading into BTC’s May 2020 halving. One of the respondents believes the current prices of Bitcoin make it hard for investors to make a killing out of a possible pump with alts providing more risky but promising returns.
“When ALTs shoot they will probably do significantly more. Higher risk higher rewards. Simple. Only makes sense if you have millions to invest in BTC at this point.”
In conclusion, the halving will surely tilt the market in either direction, and altcoins are in line to follow BTC’s price action. Time to grab BTC?