The crypto market has long been dominated by Bitcoin, with altcoins largely mirroring its movements. However, crypto analyst Altcoin Sherpa suggests a potential shift may be on the horizon. This shift could see altcoins and decentralized finance (DeFi) projects gaining more prominence, sparking renewed interest and value appreciation in these sectors.
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Historical Context and Current Market Trends
Altcoin Sherpa used $AAVE as an example to illustrate historical market movements. During DeFi summer 2020, $AAVE experienced a major surge, only to retrace 75% against Bitcoin (AAVEBTC).
In January 2021, when Bitcoin paused, $AAVE saw another price rise. This historical pattern raises the question of whether current altcoins might follow a similar trajectory. Despite a strong Bitcoin, many altcoins are retracing heavily on the USDT pair, and most alt/BTC pairs have not gained momentum.
Altcoin Sherpa emphasizes that the altcoin market has changed since 2021. Liquidity is now more concentrated, and the market no longer sees broad alt seasons. Instead, gains are sector-specific. For instance, altcoins in the AI and meme sectors have outperformed others this year. This shift suggests that investors need to be more strategic in selecting altcoins.
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The Impact of Bitcoin Movements
It’s crucial to understand the relationship between Bitcoin and altcoins. Altcoin Sherpa notes that altcoins do not necessarily rise in USD even when Bitcoin is strong. Additionally, during periods of Bitcoin volatility, altcoins tend to pull back. This pattern has been evident in the last three months.
Despite current challenges, Altcoin Sherpa remains optimistic about the future of strong altcoins. He believes that once Bitcoin breaks past its all-time high, strong altcoins will experience significant gains.
However, the exact timing of this breakthrough remains uncertain. He suggests that the strongest altcoins, possibly meme coins, will lead the next big run. There is also speculation about a potential resurgence of real value projects and DeFi 1.0, which could be a topic for future discussion.
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