This bull market is looking very different from 2021’s, and altcoins are feeling the pinch. Bitcoin’s price just hit a new all-time high, but the usual altcoin frenzy isn’t happening. Why? Let’s dive in.
Institutional Investors Are Calling the Shots
Matrixport, a crypto firm, points out that this Bitcoin rally is being driven by big players – institutions – not everyday retail investors. This explains a few things:
- Low Retail Engagement: Traditional indicators of retail investor activity are surprisingly low, even with Bitcoin hitting record highs.
- Calm Funding Rates: The cost of borrowing Bitcoin is staying pretty low, another sign of low retail involvement.
- Altcoin Lag: While Bitcoin soars, altcoins are mostly treading water.
Retail traders often make the mistake of panicking during market dips and selling off their holdings. This time around, they’re largely absent from the action.
Whales Gobble Up Bitcoin
Another key difference from 2021? Retail investors aren’t accumulating Bitcoin like they did then. Instead, large holders (“whales”) and corporations are snapping up most of the available Bitcoin. This explains Bitcoin’s resilience during corrections, according to Bloomberg analyst Eric Balchunas. It’s a quiet shift of power.
Matrixport highlights the importance of understanding how corporate demand is shaping Bitcoin’s price and how long this trend will continue. The lack of retail activity keeps trading volumes and funding rates low, leaving altcoins in the dust. We’re seeing a significant transfer of Bitcoin from early adopters, miners, and exchanges to corporations and institutional investors like BlackRock. This rally is fueled by spot market buying, not derivatives trading, which further contributes to altcoins lagging behind.
What’s Next for Bitcoin and Altcoins?
Crypto analyst Kevin Capital suggests watching Bitcoin’s weekly close. If it stays above $106,800, things might continue their upward trend. If not, we might see a repeat of some 2021 patterns. He believes altcoins, including Dogecoin, will eventually have their moment once Bitcoin’s dominance cools down. For now, though, he’s advising investors to focus solely on Bitcoin.
At the time of writing, Bitcoin is trading slightly below its recent peak.
