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Bitcoin appears to be back on the rise but will altcoins follow? Alex KrĂŒger thinks not.
Bitcoin is King
Earlier this week, economist and crypto analyst Alex KrĂŒger tweeted that in his opinion, the majority of altcoins have âbecome asymmetric bets with an unattractive return profile.â
Outside of February â Aprilâs impressive altcoin rally (Alt Season) where a number of altcoins posted 300% to 500% gains, altcoins have performed poorly against Bitcoin since late April.Â
Altcoin to Bitcoin pairings have taken an absolute beating, and altcoin to fiat pairings have also endured some dark days.
KrĂŒgerâs observation that âalts consistently underperform BTC on down days, and only sometimes outperform BTC on up daysâ aligns with a detailed report released by Coin Metricâs last week.Â
Data from the report shows that over the month of July the majority of altcoins were down more than 40%. This came as Bitcoin had only dropped 2% at the time of the reportâs publication.Â
The report pointed out that EOS (-44%), Cosmos (-41%), Cardano (-37%), Tezos (-6%), VeChain (-10%) were ânotable underperformersâ.Â
Regulatory Pressure is Impacting all Coins
The report points to geopolitical, macro-economic, and regulatory factors as the primary influence upon Bitcoin and altcoin price action.
Continued regulatory pressure on the cryptocurrency exchanges led to Bittrex, Binance, and Poloniex implementing new policies that bar U.S. traders from derivative instruments and certain digital assets.Â
The CFTC also launched an inquiry into BitMex over allegations that the exchange allowed U.S. residents to trade on its platform. These actions appear to have shaken investor confidence in altcoins and led to their poor performance.Â
Facebookâs reveal of its Libra token project also excited Bitcoin investors but the following regulatory pressure brought on by U.S lawmakers seems to have negatively impacted Bitcoin price.
Additionally, U.S. Treasury Secretary Steven Mnuchinâs comments about stringently regulating Bitcoin shoot confidence as these statements circulated throughout mainstream media.Â
The Big Picture Favors Bitcoin
From a macroeconomic perspective, many countries are gravitating toward monetary easing and investors are wary that a global recession could slowly be in the making. Coin Metrics points out that:Â
It now seems nearly certain that the four major central banks of the world (the Federal Reserve, the European Central Bank, the Bank of Japan, and the Peopleâs Bank of China) are on the cusp of another monetary easing cycle. As real interest rates decline, the opportunity cost of holding non-yield producing assets like Bitcoin declines.Â
Only time will tell whether or not altcoins find some strength and regain the large swathes of territory that have been forfeited to Bitcoin over the past few months. To be frank, until Bitcoinâs dominance rate drops, it seems highly unlikely.Â
Do you think altcoins will recover before the end of 2019? Share your thoughts in the comments below!Â
Image via Shutterstock, CM Reference Rates, Twitter:@krugermacro
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.