Bitcoin plunged below the strong support level of $40K and returned to gains after that. Ethereum also plunged below $2.9K and bounced as well. But other altcoins will not support the eventual rally, analysts say.
Binance Coin (BNB) plunged nearly 15%, while other large-cap altcoins dropped to 20%. This led to an overall market drop below $2 trillion for the first time since September 2021. However, experts believe that the onset of a crypto winter is unlikely.
Another redistribution of investments between cryptocurrencies is taking place. Institutionals from the United States have begun to influence the market more strongly. After the ban of cryptocurrencies in China, US investors determine the trends of cryptocurrencies. The published minutes of the last 2021 Fed meeting and confirmed rumors of a key rate hike in March were the fundamental factors behind the market decline.
Cryptocurrencies are now correlating with the US stock market, which also declined on news from the Fed. However, investors behave differently in fiat and cryptocurrency markets. Cryptocurrency whales began to accumulate bitcoin at lows, according to the analytical service IntoTheBlock. The post is like that:
– Whales Accumulate. As #Bitcoin dropped below $50,000 addresses with over 1,000 BTC proceeded to increase their holdings. These addresses tend to lower their holdings following large rallies and patiently wait to buy at lower levels.
It is highly likely that to buy BTC and ETH whales prefer to withdraw money from altcoins. Earlier, former BitMEX CEO Arthur Hayes said that the fall of the two leading cryptocurrencies will lead to a dramatic drop in the rest of the altcoins by 75-90%. The expert suggested that large investors are disappointed in cryptocurrencies and are ready to transfer money to fiat assets. However, the situation on the US stock market does not speak in favor of such a strategy.
It is likely that whales have returned to the practice of using bitcoin as digital gold and prefer to withdraw funds from risky assets, which they consider new cryptocurrencies issued by smart contract platforms such as Solana (SOL), Cardano (ADA), Avalanche (AVAX). Against this background, the growth of the two leading cryptocurrencies and the fall of the rest of the altcoins are expected in the short term.
In the long term, BTC and ETH may consolidate at levels that are 20-30% below historical highs with prices of around $50K and around $4,000, respectively.