It’s an exciting time in the cryptocurrency world! Bitcoin recently blasted above the $94,000 level all-time high, piquing the interest of both investors and market analysts as to why this monumental rally occurred. At MetaBlock X, they aim to break down the key factors contributing to this surge, providing actionable insights to help readers navigate this exciting yet volatile market. They’ll look at the influence of political actors like Donald Trump. They’ll look at what altcoins have done in the past and what unique factors are at play in this halving cycle.

Trump's Trade Signals and Crypto Stance

I think it is undeniable that Donald Trump’s recent moves and statements have spurred the crypto market. For the last two years he’s attempted to brand himself as the pro-crypto president, a shocking reversal from his administration’s prior, anti-crypto policies. Despite a limited list of suggested projects, this poignant change in rhetoric around infrastructure has been viewed favorably by investors.

Adding to the curiosity, Trump’s nascent media company is touting its intentions to launch exchange-traded funds (ETFs). Continuing to show the growing acceptance of crypto from within traditional financial circles, today’s announcement provides more fuel for the ever-growing market optimism.

In fact, earlier this month, Trump bragged about his sudden 90-day freeze on most retaliatory tariffs making the stock market jump. The International Monetary Fund (IMF) recently sounded the alarm. They worry that his suggested “reciprocal tariff” policy would damage economic growth overseas and here at home. This run of policy changes has added a ton of uncertainty to the market, which could be pushing investors into other assets such as Bitcoin. Wednesday was the fourth day in a row for net inflows, as US-based spot bitcoin ETFs recorded $916.91m in inflows.

Altcoin Performance and Bitcoin Dominance

The importance altcoin performance, the phrase used for all alternative cryptocurrencies other than Bitcoin, cannot be understated in terms of what drives Bitcoin’s market behavior. A change in the investor sentiment towards altcoins can have drastic effects on Bitcoin’s dominance and price.

Understanding Altcoin Season

Bitcoin’s current market dominance can take a huge nosedive. For instance, bumping it down from 86.3% in late 2017 to a mere 38.69% at the beginning of 2018 is usually a signal that an “altcoin season” is about to begin. It’s at these times that investors tend to look past Bitcoin and towards altcoins. This big change has the potential to grow the altcoin dominance on total crypto market cap. This mission is too frequently guided by dreams of greater returns and the higher volatility found in altcoins.

On the flip side, when Bitcoin goes down it often causes an entire altcoin market sell-off, dragging down other coins. During uncertain times, investors often look for a safe haven which Bitcoin then acts as in such situations by significantly increasing its price. The relationship between altcoins and Bitcoin is an interesting one, as the performance of each directly affects the other. Finally, let us not forget that most altcoins quickly turn to sh— when measured against Bitcoin (BTC) in the long run and in a systematic manner as well.

Bitcoin's Price

Once Bitcoin’s price starts to settle down, speculators immediately shift their focus to altcoins. This move often leads to altcoin dominance increasing in the total crypto market. How well altcoins are doing compared to Bitcoin can have a big impact on Bitcoin’s own market health. When Bitcoin goes down, it causes an overall market dump, pulling down altcoins with it. In times of crisis, Bitcoin has emerged as a safe haven asset on the market.

The Halving Cycle and Market Dynamics

Bitcoin halving occurs approximately every four years. At this event, known as a halving, the Bitcoin reward for mining new blocks is halved. This event has had a profound effect on Bitcoin’s price action and market behavior in the past.

Factors Influencing the Current Cycle

These are forcing the market toward a more complex and thus more dangerous and volatile environment.

  • Unprecedented institutional engagement: There's an unprecedented level of anticipation and institutional engagement.
  • Mainstream adoption: Bitcoin has seen a steep curve of mainstream adoption.
  • Launch of Bitcoin Spot ETFs: The successful launch of 10+ Bitcoin Spot ETFs.
  • Increased correlation with S&P 500: In recent years, the correlation between Bitcoin and the S&P 500 has been noticeable. However, in 2024, the correlation has been varied, with periods of negative correlation, which is a unique factor.

Here are some actionable insights for investors:

Navigating the Volatile Market: Actionable Insights

By implementing these strategies, investors can better manage risk and potentially capitalize on the opportunities presented by the current crypto frenzy.

  • Maintain a long-term outlook: Avoid reacting to daily price swings and instead focus on the long-term potential of your investments.
  • Diversify your portfolio: Spread your investments across different cryptocurrencies and assets to reduce exposure to any one particular market.
  • Reallocate to crypto with lower volatility spread: Consider rotating into crypto assets with narrower Keltner spreads, which may provide a more controlled risk profile.
  • Use swing trading or day trading strategies: These methods involve holding coins and tokens for a few days to a few weeks (swing trading) or buying and selling within a single day (day trading) to profit from market price fluctuations.
  • Set a risk-reward ratio: Aim for a risk-reward ratio of at least 2:1, where the potential benefit is at least twice as large as the potential loss.

With MetaBlock X, you can explore the new digital asset world with clarity, confidence and control.

MetaBlock X empowers you to navigate the digital asset landscape with clarity, confidence, and control.