Over the last week or so we have been noticing the recurring theme of “Bitcoin Dominance”. Not too long ago we wrote a morning report called Percentage Down from All-Time Highs. We wrote there are two ways of looking at this “Bitcoin Dominance” theme: “The first is that we are indeed climbing out of crypto winter and these other coins will have a delayed effect — meaning the BTC is the leader of the pack but those still beaten down will be soon follow the rally. The other thesis is that this price action of the weaker coins show that these protocols have no new money coming into it and will die a slow death.”
This chart above from CoinMarketCap shows that since the runup beginning in April, the overall percentage of BTC as the global market cap within digital assets has rallied from low 50%’s to ~65%. On the opposite side of the spectrum, ETH has fallen from slightly above 10% to 9% and ‘others’ down from 20% to ~15%. We also wrote that, “A fund or trader who is confident in his skillset to pinpoint and understand the fundamentals of these cryptos, could do well to establish long/short positions amongst these tokens to generate ALPHA, and differentiate themselves from their competitors who are more correlated to the price of BTC or a crypto index (BETA).”
The trading environment over the last few months has certainly given long/short strategies the opportunity to succeed. The numbers from the chart show clearly that being long BTC and short the ALTS has been a very good trade.
As we see prices get slashed across the board from last night and into this morning, we still maintain that the $10,000 BTC level is one to keep an eye on as it is a ‘round number’ and can cause a change the bullish mentality this market has established for the last few months. If this level is breached there appears to be ‘air’ down to $7,000-$8,000 range.