The CEO of blockchain intelligence platform CryptoQuant announced that the expected altcoin bull period will be different from previous periods. On-chain analyst Ki Young Ju stated in his statement on the social media platform X that the liquidity flowing from Bitcoin to altcoins will no longer be at the levels of previous cycles.
Increased Corporate Participation
Ju stated that institutional participation in Bitcoin has increased and this has affected the altcoin markets. Increased buying by spot market BTC exchange-traded funds (ETFs) and software company MicroStrategy (MSTR) is causing Bitcoin to drift away from the crypto ecosystem.
The analyst said, “This altcoin bull will not be what you expected. It will be strange and difficult. Only a select few will win the game. “Market sentiment is good, but not a lot of new liquidity,” he said. He noted that Bitcoin’s paper-based layer two ecosystem has been established through ETFs, MSTR and funds. Strong volume in options and futures also in the 2021 bull “paper Bitcoin (BTC) $96,937With his story, he was feeding concerns that liquidity would be much less in the spot markets. Now, MSTR and ETFs have come on top of these. If the proxy includes ETFs, liquidity will be more fragmented than in the previous cycle.
Relationship Between Bitcoin and Altcoins
Ju shared a chart showing that the price correlation between Bitcoin and altcoins is decreasing. He noted that while altcoins used to show high correlation with Bitcoin, now only a small number of altcoins exhibit independent trends.
“Bitcoin spot ETFs now hold as much BTC as Bitcoin founder Satoshi Nakamoto (Patoshi) is believed to hold.”
Additionally, the analyst added that Bitcoin ETF demand was strong until its initial approval at the beginning of the year. He stated that interest in Bitcoin ETFs is at historical highs.
“Bitcoin ETF demand is just as strong as their initial approval this year.”
Ju stated that the transition of Bitcoin’s paper-based layer two ecosystem to Altcoins is impossible. This requires altcoins to grow independently and provide their own liquidity flows. What if ETF applications for assets such as XRP and SOL create second markets for these altcoins? Maybe we will see days when this expectation is better priced.
For crypto investors, these developments show that they need to reconsider their strategies during the altcoin bull period. The reduced migration of liquidity from Bitcoin to altcoins means that altcoin markets will become more independent and dependent on a variety of factors.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
