A closely followed crypto strategist and trader is warning digital asset traders that altcoins are likely to get hit hard as capital rotates to less risky assets.
Pseudonymous analyst Pentoshi tells his 514,000 Twitter followers that he’s keeping a close watch on the Bitcoin Dominance Index (BTC.D).
The Bitcoin Dominance Index measures the valuation of BTC in relation to the market cap of all other crypto assets. A surging index suggests that altcoins are either losing value faster than Bitcoin or BTC is growing faster than alts.
According to Pentoshi, the BTC.D chart looks incredibly bullish after holding support at 39.70%.
“BTC dom vs alts.
Alts look primed to get decimated here. BTC dom knocking at new highs = alt/btc pair breakdowns.
Believe it or not, great for the market to get rid of dead weight for new growth later.”
At time of writing, BTC.D is hovering just above 43%, indicating that Bitcoin is holding strong while altcoins are steadily losing value.
As BTC.D flash signs of strength, Pentoshi predicts that capital will continue to move away from altcoins and seek refuge in Bitcoin.
“Alt/BTC + USD bleeding out rapidly while BTC sits here. BTC.D making new highs can be alt outflows to BTC before BTC outflows before total market outflows to [stablecoins].
Just my two cents but possible current flows.”
The crypto strategist also says that the pullback on February 10th and 11th showed the weakness in the altcoin market.
“One thing I’ve learned over time. When the market gives you several times to buy support. It’s probably not going to be support for long. Two days ago, alt season tweets were flying. Today full retraces. A lot of markets is at support levels that when lost can = significant drawdown.”
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The post Crypto Strategist Warns Altcoins Face Significant Drawdowns, Says Market Getting Rid of ‘Dead Weight’ appeared first on The Daily Hodl.