Crypto money is flowing away from altcoins to Bitcoin as spot ETF demand wanes and other cryptocurrencies experience a sell-off, according to market maker Wintermute and the market overview from Phemex. The message for those holding altcoins couldn’t be clearer – there will be no broader uptrend without Bitcoin’s leading move.
Wintermute reportedly estimated that the $82,500 mark is a new key level for Bitcoin’s short-term movement. The line that was considered a barrier turned into a price that the bulls are trying to defend after Bitcoin fell marginally over the week.
According to the firm, there are only two ways forward now – either a breakthrough through $87,000, thus opening the way to higher prices, or falling below $82,500, sending the price towards testing the $70,000 mark again.
But Bitcoin has already faced one stress test. In its latest weekly report, Wintermute pointed out the drop to $80,400 was caused by $679 million of net outflows from spot Bitcoin ETFs, which was nevertheless defended by the buyers. Wintermute believes the token is “holding up better than the macro tape would suggest,” citing the 3.5-point lead over the Nasdaq.
Inflation data put the squeeze on risk assets
Pressure can be traced back to the macro level. US inflation reached 3.7%, whereas the core rate increased by 0.3%, indicating that higher energy prices were passed through into the core prices.
The response was quick. The Nasdaq index fell 5.5%, but investors went for safer bets – Brent oil rallied 5.0%, and US government bonds increased 2.65%. It is the return of the relationship between conventional markets and crypto that messed up the crypto market, according to Wintermute.
Bitcoin price dipped by more than 2% over the last 24 hours. BTC is trading at $81,726 at press time. Ether price took a drop of almost 3% over the last day. ETH is trading at $2,401 at press time. However, the cumulative crypto market cap is down by 2% over the last day to stand at $2.84 trillion.
Altcoins bleed as money concentrates in majors
The sell-off took a toll on the broader market. The altcoin industry fell by 5.69% in the past week. The trading desk at Wintermute noted that the flow of altcoins is becoming one-sided apart from a select few high-quality large-cap alts as traders take money out and keep it in the two largest cryptocurrencies. For anyone seeking profits in other places, Wintermute concluded that “the risk/reward ratio favors majors over altcoins now,” and Bitcoin “needs to be up for altcoins to have any hope of resuming a rally.”
According to Phemex, the rotation could be seen in the form of 60% dominance of Bitcoin as altcoins performed poorly. In addition, a whale liquidated after losing 121.33 BTC, worth about $9.9 million, due to the sell-off, along with plummeting stocks in Asia and China entering a bear market.
Why October 28 is the date to watch
Wintermute is sure that the present narrow price range won’t hold through the future event calendar. It cited the October 28 FOMC meeting as the most probable catalyst for an upcoming breakout, noting that “it cuts both ways.”
A hawkish outlook from the Fed should drag the Nasdaq down along with Bitcoin. On the other hand, a dovish sentiment combined with robust corporate results can be enough for bulls to drive prices higher.
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