Bitcoin's Outperformance: Understanding the BTC vs. Altcoin Rally

Altcoins, especially low caps, have been taking a beating while Bitcoin makes its run toward great heights and ETH keeps pace.

There is more than one reason for this:

1. Crypto moves in cycles, there are generally parts of any crypto cycle where low caps preform dreadfully while only Bitcoin or Bitcoin and a few large caps run.
2. BTC and ETH are arguably the two most important, well known, and accessible cryptos in the crypto space. When major interest returns to crypto, it is no surprise that money moves into BTC and ETH first. This has historically been the case.
3. Facebook launching a cryptocurrency is a big deal. That has got Bitcoin a lot of media attention. The Libra news is likely a big factor in why BTC is running, meanwhile ETH is pretty much just keep pace with BTC.
4. US geoblocking for low cap alts is a big deal. Binance and many exchanges are geoblocking users from some or all altcoins (mostly low caps that had ICOs after July 2017). This is pretty bearish for alts.
5. New money has to use dollars to buy BTC and ETH in order to buy alts. You have to go into BTC and ETH before you can buy most alts. So even if you geoblocking doesn’t scare you, you still have to go to BTC and ETH first anyway.

In short, if new money from the US is coming into crypto over the Facebook news, they aren’t going to sign up for Binance only to be restricted from trading a month later, they are going to sign up for Coinbase, Kraken, or Bittrex and use USD to buy top coins they know like Bitcoin and Ethereum.

And, even if they do want to invest in / trade alts (which they no doubt will at some point when they realize the potential of them to do what BTC just did), they have to go to BTC and ETH first.

Meanwhile, old money, that 15% of the market that is the US and was sitting in alts, is at the same time dumping their alts for BTC and ETH (because of the geoblocking).

Then, at the same time, all of that flow of funds from alts to BTC and ETH is causing others from non-geoblocked countries to make the same move.

All of that has compounded into a BTC run with ETH keeping pace (and some large caps out preforming at points, like NEO for example).

So of course we could from here go into chart analysis, compare this run to 2013, consider if this is the world’s biggest corrective wave bull trap, try to guess where we will get a correction and if alts will run there, etc.

But then that gets complicated. Let’s keep it simple.

The reality is we have this really simple reason for a run of the top coins: 1. Libra, and 2. the flight from geoblocked coins into large caps (that aren’t geoblocked).

Then, logically, the above is the same reason we are seeing alt coins lose BTC value.

This doesn’t mean there isn’t hope for alts, it just means that this is the part of the cycle where it sure feels that way.