What’s the Safer Bet: Altcoins or Bitcoin Maximalism?

February 3, 2022

Cryptocurrencies: Daily Update


For the first time in what seems like a long time, Bitcoin seems to be the center of attention within crypto.

Lately, we’ve seen even more institutional and governmental establishments around the world proclaim their support for the world's largest cryptocurrency by either investing in the asset or offering services revolving around Bitcoin:

Fidelity representatives would also announce this week that they have been mining and accumulating Bitcoin since 2014.

It is no surprise that Bitcoin is the choice currency for institutional investors, as it is the longest-running and highest valued cryptocurrency/blockchain in existence.

Many would argue that because the altcoin market has almost always tracked Bitcoin’s macro trend, there is no reason to invest in anything else. This is the philosophy deployed by self-proclaimed Bitcoin Maximalists such as Michael Saylor of MicroStrategy, who simply continues to accumulate Bitcoin and refuses to trade anything else or sell.

However, as the blockchain industry continues to integrate with existing functions of our economy and society, we’ve seen other cryptocurrencies prove to be more effective or efficient than Bitcoin. Keep in mind that Bitcoin was designed to function as a digital currency, and not necessarily a platform for decentralized financial services.

So we’ve seen Ethereum (ETH) emerge as the biggest potential rival to Bitcoin in the cryptocurrency market. As Ethereum’s decentralized network allows anyone anywhere to build their own businesses and financial services on the blockchain, Ethereum has exploded in the past several years.

We saw other blockchains like Solana (SOL) and Avalanche (AVAX) boom towards the end of 2021 as a result of developing the ability to optimize all of the things that Ethereum is able to do.

Right now there really is no obvious sign as to who will be right in the near future between bitcoin maximalists and those that believe in the destined flippening (Ethereum surpassing Bitcoin by market cap).

We are not Bitcoin maximalists, but we can appreciate the pro-Bitcoin sentiment that is leading the hopes of a potential marketwide recovery. We will soon see institutional money flow into cryptos like never before thanks to crypto ETFs and futures, and the easiest coin for institutions to purchase is and will be Bitcoin for the foreseeable future.

On the other side of the coin, it is also fair to believe that if Bitcoin turns around and starts moving up again that we’ll see newer altcoins outperform BTC on a relative basis.

At this point, nobody is sure who will be right, but it looks pretty clear that institutional interests are still predominantly in Bitcoin.

On a weekly basis, Bitcoin still needs to break its nearly 3-month downtrend before we can proclaim that any kind of bottom is in.

The wedge between Bitcoin's downtrend and the $31,750 support area is getting close to breaking, and with the slightly more encouraging comments from the Fed this week we’re hoping that the wedge will break to the upside. The next immediate target/resistance level for Bitcoin remains the psychological $40,000 level.

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