Crypto markets were bleeding red today as a deep sell-off tanked prices across the board. While Bitcoin FUD has been dominating headlines, it was alts that suffered most.
Alts Get The Raw End Of The Sell-Off
The total crypto market cap fell 32%, losing some $600 billion at its lowest point today. Although late lunchtime GMT saw a relief rally kick in, fears over further downside continue to dominate sentiment.
During the peak of the panic selling, all alts were deep in the red, nursing losses of between 25%-45%. At one point, Ethereum could be bought for $2k, while Cardano dipped briefly to $1.05.
If the dollar losses weren’t enough to contend with, alts suffered a double whammy as Bitcoin dominance spiked as high as 45.85 before retracing. Meaning, the value of altcoins quantified in Bitcoin also took a significant hit.
Today’s candle has yet to close, but a swing of this magnitude (six points at the time of writing) is a rare occurrence that has not been seen since late May 2020.
The worst thing that could happen to altcoin holders right now is for Bitcoin dominance to reverse its five-month downtrend. Analysis shows BTC.D would need to break above 54.6 for this to be officially called. Although short-term, that’s still a significant way away from the current dominance level; stranger things have happened in crypto.
Bitcoin Is Still The King, But Is Crypto Now Falling Out of Favor?
As much as Bitcoin gets called the boomer of crypto, today’s sell-off and subsequent inflows into BTC show that it’s still the king.
Proponents of the boomer label cite its lack of functionality and outdated technology in supporting their claims.
Nonetheless, with a crash of this intensity, the spotlight is back on crypto as a bonafide investment class. Critics often refer to volatility in crypto markets as a reason why it fails as a store of value and payment method.
Last week, the SEC poured cold water on the idea of approving a Bitcoin ETF due to its extreme volatility. This, they say, makes it a “highly speculative” investment.
A new report by JP Morgan claims that institutional investors are dumping their Bitcoin in favor of gold. Based on the analysis of open interest in CME Bitcoin futures contracts, the investment bank said institutions had changed their mind on the leading cryptocurrency.
“The bitcoin flow picture continues to deteriorate and is pointing to continued retrenchment by institutional investors.
Over the past month, bitcoin futures markets experienced their steepest and most sustained liquidation since the bitcoin started last October.”
This corroborates with a resurgence in the price of gold, which has been trending upwards since late March. Earlier this week, it broke above its 200-day moving average to make a three and a half month high.