To review it, here is what many investors may have internalized as true:
- When the price of Bitcoin (BTC) is consolidated (trades laterally), traders will take their profits and start operating higher capitalization altcoins, this catalyzes a similar movement in other altcoins and could cause them to recover.
- As the price of Bitcoin reaches new highs in 2019, the 10 most capitalized alternative currencies will move together.
- A significant fall in the dominance of the Bitcoin market capitalization will put the ball on the altcoins court.
So far, none of these things has happened. In fact, the situation for most altcoins has worsened even more.
To get more clarity on this situation, Cointelegraph decided to ask a professional fund manager to explain what is happening with the crypto sector and why alternative currencies have not followed Bitcoin as they did in the past.
Cointelegraph spoke with Clark Cantering, a hedge fund manager and co-founder of Blockroots, to use his knowledge to analyze the general state of the market and whether alternative currencies will be recovered.
Cointelegraph: Bitcoin has had some trading periods of limited range since it reached a maximum of USD 13,800. In your opinion, why have we not seen traders take advantage of this consolidation to jump to the altcoins? Also, what exactly is an "alternative season" in your opinion?
Clark Cantering: Alternative season was essentially a group of new investors who entered crypto space, attracted by Bitcoin. They saw that Bitcoin was very expensive and the perception at that time was cheaper than future alternative currencies will become future Bitcoins.
Newer investors relatively ignored market capitalization and multiplier effects, only saw the lowest price and equated a cheaper price with a better deal.
In my opinion, the altcoins were the epitome of the bubble for 2017 and the process closely reflected the Gartner Hype cycle.
Bitcoin is essentially the asset chosen by the industry and has become the refuge of cryptocurrencies. When Bitcoin works well, there are flows that can be capitalized, but this flow cycle has begun to break loose and crumble.
Reverse correlation and positive correlation is no longer a conventional fact that investors can constantly rely on.
"The price of Bitcoin has not exceeded the historical maximum, and it is unlikely that the next alternative season will occur until this historical maximum is broken."
CT: Shouldn't a fall in the Bitcoin domain lead the altcoins to an increase?
DC: If the Bitcoin domain rate was reduced to 40%, this would probably bring an alternative season, but it is unlikely that this type of domain change is within the possibilities at this time.
CT: Do you think the confirmation bias of investors affects the price action of Bitcoin? For example, many investors believe that if Bitcoin should fall below the 61.8% Fibonacci retracement level before a real bull market begins.
DC: Bitcoin is so volatile and has gone through all possible asset scenarios. Moving averages are useful because traders make them useful.
The collective effort of traders makes the need for Bitcoin to review any price more "likely" thanks to group thinking. Fibonacci retracements work because we make them work and place offers and questions in the order book, accordingly. Basically, almost all resistances and supports are based on this thought.
A review at the 61.8 Fibonacci level decreases the likelihood that we will go back because it shows that buyers are reluctant to intervene and buy at a higher price, or before that price is reached.
As for crypto-Twitter, there is a deluge of cognitive biases that are found there every day. We should work to avoid confirmation bias and that is why I suggest reading Daniel Kahneman's Thinking Fast and Slow.
CT: Tell us what led you to invest in cryptocurrencies.
DC: I was attracted to cryptocurrencies mainly due to volatility.
CT: Give us your best explanation of how leveraged trade works and how it can be used in favor.
DC: In crypto, people use leverage to amplify profits through increased capital exposure. In most cases, operators take care of losses because they do not really understand how the margin works and what it is really designed for.
The margin / leverage mitigates the counterparty risk, and this is especially beneficial for cryptocurrencies. With leverage, if I have 1 BTC, I can store 90% of my BTC in a cold wallet and only put 10% of the BTC in the exchange and protect myself from counterparty risk.
Leverage also provides the opportunity to trade on both sides of the market. Often, traders use too much leverage and are liquidated as the market moves against them, but a good deal of leverage provides the opportunity to take advantage of market trends.
2x and 3x leverage allows one to play the trend, especially when Bitcoin is in a strong trend with clear levels of support and resistance.
CT: Tell us a little about Blockroots?
DC: Our main objective is to educate new merchants and separate truth from noise. There are a ton of paid groups and these are not always the best way for new operators to learn to understand the basics of investment.
One of the problematic aspects of the cryptocurrency market is that there are many commercial and novice groups that copy the proposed commercial systems into paid groups, a kind of blind shot. The new operators are not really fully aware of how effective these trading systems are, they have no transparency regarding the success rate of the trader. Blockroots provides a base-level academic trade approach to help new operators understand where they are going.
This interview was conducted in collaboration with Horus Hughes. The interview was edited and condensed.
Source link
https://es.cointelegraph.com/news/no-altseason-until-bitcoin-breaks-20k-says-hedge-fund-manager
