Bitcoin is trading at $111,194.83, a figure that keeps it well above the six-figure threshold. The current price reflects both strong market demand and lingering investor uncertainty. Traders are closely watching how Bitcoin interacts with Altcoins, as this relationship often sets the tone for the broader crypto sector.
The crypto market has long observed that when BTC moves within a tight price range, other coins tend to take the spotlight. Altcoins often rise during these moments, creating a temporary divergence in performance. That shift lowers the correlation with BTC, but it comes with risks.
Analysts caution that volatility often follows when this gap widens. For investors, the situation resembles a warning signal rather than a free pass to assume further gains.
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Alphractal stressed the significance of tracking the Correlation Heatmap. It indicates how much the Altcoins follow the movements of BTC. As soon as the Altcoins deviate, the market enters turbulence. Sometimes, it works on the positive side, but more than often it creates sudden pullbacks.
When Bitcoin remains stable but doesn’t trend, the Altcoins take the chance to spike momentarily. But such rallies do not last very long. Bitcoin eventually asserts itself and brings the Altcoins back in line.
On the contrary, on days where BTC gradually falls, correlation to Altcoin grows instead of diminishing, signaling coordinated weakness. Traders can track such movements to estimate correlations like some fleeting thermometer of the market.
Another forum contributor is Darkfost, who has observed the Bitcoin cycle. He questioned whether the old four-year model still holds true. From his point of view, just one factor dominates the rest: long-term investors continue to lead the trend of market activity by buying and selling.
Darkfost cited such indicators as Value Days Destroyed (VDD) and Coin Days Destroyed (CDD). Both of them account for the impact of coins sold after long periods of accumulation that remain inactive.
CDD follows the duration coins have remained inactive before they are moved, and VDD adds the cost of the action by weighting the outcome by market value.
As Bitcoin reached its recent all-time high, VDD reached 2.4, normally a level of critical selling pressure. It has since fallen, which shows that long-term holders are yielding on their sales.
This would mean that the primary cause of downward pressure might be relaxing. If demand is steady, the market may have some leeway for one more push up.
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