Past Crypto Cycle Highlights Altcoin Underperformance, But Perfect Storm is Coming

Tony "The Bull" Severino

5 years ago

3 mins read

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Although altcoins have vastly outperformed Bitcoin in recent weeks, the asset class is still trailing far behind the first-ever crypto asset when compared to past cycles.

And if history repeats, Bitcoin is likely to trade sideways over the next few months, making for the perfect environment for altcoins to shine and steal the limelight once again.

Altcoins Extremely Undervalued Compared To Previous Crypto Market Cycle

Despite 11 years in existence, cryptocurrencies are still a relatively young financial asset class.

Even with such a small sample size to analyze, top crypto analysts often look to past crypto market cycles to attempt to make sense of current price action taking place across Bitcoin and altcoins.

After a historic rally kicking off the new year, resulting in the leading cryptocurrency by market cap growing by over 40% year to date, and its altcoin cousins outperforming BTC by a large margin, it’s clear a new bull market is near.

However, past cycles suggest that altcoins are severely undervalued against Bitcoin compared to historical performance.

When comparing past cycles, altcoin dominance was far higher than current levels when compared against Bitcoin price models within the same timeframe.

during that 3-4 months (100-130 days) long period in 2016 the shitcoin dominance% has doubled (altszn)

2nd pic: the current make-believe triangle is ongoing for over 8 months now, shitcoins only have started growing their dominance % somewhat (26% only) the past 40-50 days pic.twitter.com/tCKGSNJeXl

— smolting (wassie, verse) (@inversebrah) February 20, 2020

This suggests that altcoins have a lot of catching up to do across the asset class.

This should come as no surprise, considering that most altcoins dropped over 90% from the all-time high valuations, and have spent two full years in a bear market they are only now escaping from.

Bitcoin Pre-Bubble Fractal Shows Short Term Sideways Before Explosive Growth Resumes

But this all could change soon if past price action plays out the same way during the current crypto market cycle.

And while past performance isn’t an indicator of future success, history does often repeat itself, and markets are incredibly cyclical.

According to past cycles, Bitcoin is likely to trade sideways from here, for the next few months leading up to the Bitcoin halving.

without replay mode pic.twitter.com/ODH8xGnohV

— smolting (wassie, verse) (@inversebrah) February 20, 2020

If this is the case, sideways trading is often considered the ideal environment for altcoins to grow.

The theory is that while Bitcoin remains stagnant, some crypto traders get bored with the price action and begin diverting capital toward underperforming altcoins.

The low liquidity in these assets causes prices to rise quickly, and more and more investors sell their Bitcoin into altcoins to take advantage of the additional gains.

And even though altcoin sentiment being positive always leads to Bitcoin growth, further selling of Bitcoin into alts can keep the first-ever cryptocurrency trading sideways for an extended period of time, even if new fiat is flowing in.

Regardless of where that fiat ends up – Bitcoin, Ethereum, XRP, Tezos, or others – it all benefits the greater crypto market and pushes it closer towards the next major bull run.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.