In a post on X, an analyst observe that altcoin market capitalization has separated from the Wyckoff accumulation phase. With this rally, the trader expects altcoin prices to rise.
This refreshing breakout coincides with the stellar performance of bitcoin (btc) when I wrote on February 28. At spot rates, the coin is trading above $60,000, a round psychological number (now supported) and is very close to $70,000.
Altcoin Breakout From Accumulation
The “Wyckoff accumulation pattern” is a concept developed by technical analysts to select potential buying opportunities, in this case, altcoins. Whenever prices are in this phase, it is widely believed that so-called “smart money” or large institutional players are accumulating at low prices.
Currently prices are consolidated in tight ranges and with low trading volumes. A signal that marks the end of this accumulation is a sharp breakout that lifts prices above the defined range. Often, this rally comes with an increase in trading volume.
If we look at the chart, the market capitalization of altcoins has surpassed the accumulation phase. With the above resistance and support, the altcoin market capitalization is likely to continue floating upwards. As such, major altcoins including ethereum (eth), Solana (SOL), and XRP will follow suit and record new highs in 2024.
Why are bitcoin spot ETFs giving btc an edge in this bull run?
So far, bitcoin is leading the way, registering over $10,000 in less than a week. However, with the coin trading above $60,000, its demand-side drivers differ completely from what influences altcoins. The approval of spot bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) has seen billions of dollars flow into the world's first cryptocurrency.
Therefore, while altcoins have historically outperformed btc when cryptocurrency prices rise, there is an advantage with spot bitcoin ETFs. As such, this bull run will likely differ from that of 2017 and 2021. This forecast is because institutions will likely favor a regulated asset over altcoins whose status remains undefined.
As of late February 2024, the US SEC had not approved spot ETFs of any altcoins, including ethereum. Additionally, the agency has labeled several major altcoins, including Cardano (ADA), as unregistered securities. The agency even filed lawsuits against major exchanges such as Binance and Coinbase, accusing them of facilitating trading in what the commission described as “unregistered securities.”
It is not immediately clear whether the US SEC will change its view of major altcoins, especially ethereum (eth), which has a market of more than $400 billion. Wall Street heavyweights like BlackRock and Fidelity remain interested in launching ethereum spot ETFs.
Featured image of DALLE, TradingView chart
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