- The last 24 hours saw more traders bail the Bitcoin ship as the coin continued ranging in the neighborhood of $48,000. At writing, the cryptocurrency was trading at $48,011, 0.30% up from Monday’s close.
- More than 75% of the top 50 altcoins outperformed Bitcoin over the past month, making it an Altcoin Month. Cardano is one of the altcoins leading the charge.
Bitcoin is range bound as more traders book profits
Bitcoin is coming off a short-lived rally as the cryptocurrency strives to re-test the historical high established in mid-April 2021. Analysts started wondering at around 23 August whether the rally was sustainable. Now, all the signs point to a market that is due for a correction.
In the first place, the BTC price is about 6% (at writing) down from the last peak on 23 August 2021, although it is holding support above the 200-day moving average.
Secondly, the Fear and Greed Index was at 73 at writing. According to Cryptocurrencytracker.info, the market is growing greedier as the index moves towards 100 and is increasingly fearful when it moves in the opposite direction, with zero signifying extreme fear.
While extreme fear indicates the possibility of a buying opportunity, excessive greed shows more traders are booking profits. At 73, the Fear and Greed Index suggests that the Bitcoin market is due for a downward correction.
FOMO is driving traders towards altcoins
Altcoins are on the receiving end of Bitcoin’s softening demand. According to eToro’s Yoni Assia, excitement is building regarding Bitcoin alternatives. “You can definitely see it within the numbers in the industry, whether it’s looking at total volumes or looking at the growth of companies,” Yoni told Bloomberg.
For example, Cardano’s (ADA) price is 106% higher at writing compared to the beginning of this month. Other lesser-known coins like Avalanche are three times more valuable in the same period.
According to Blockchaincenter.net, Bitcoin has underperformed 75% of the top 50 altcoins in the past 30 days, making this an Altcoin Month. In other words, traders are shifting away from Bitcoin, perhaps in anticipation of a significant trend reversal. Some analysts think the altcoin frenzy could be an offshoot of FOMO, stemming from the belief that newer coins tend to take off after the mainstays soften.
Cardano’s strength goes beyond altcoin frenzy
For Cardano, the altcoin frenzy does tell the whole story. This is because a strong narrative backs the token’s rally.
In the first place, the Cardano blockchain network is due for a hard fork on 12 September 2021. Dubbed Alonzo update, the fork will upgrade the Cardano network by incorporating a smart contract functionality. If successful, the update will enable Cardano developers to create and deploy native decentralized applications (dApps).
Also, ADA is coming from a position of strength concerning price action. As such, one cannot say that the current rally is entirely a result of the altcoin frenzy.
According to the chart below, the Cardano market is growing stronger as the Alonzo update approaches. For instance, the Volume Flow Indicator (VFI) strengthened throughout August, indicating a growing bullish sentiment. Also, the RSI is range bound, indicating that the buying and selling pressure is in equilibrium.
As things stand, Bitcoin will struggle to remain above the 200-day MA. The challenge might become insurmountable if other central banks adopt the attitude of the People’s Bank of China, which said this week that Bitcoin has no value. On the other hand, Cardano looks poised to test the all-time high in the coming weeks, especially if the Alonzo update matches expectations.