Bird said that he’ll remain bullish on BTC while Bitcoin dominance remains high and the price stays above the high US$80k range, but that most altcoins remain stuck in a prolonged bear market.
Market expert David Bird, aka ASX Trader, said he remains positive on Bitcoin for now, but the rest of the crypto market is very much in bear territory and altcoins aren’t likely to pop in the short term, speaking on the ‘Tapping Into Crypto’ podcast this week.
Bird’s enduring bullishness on Bitcoin and doubt around altcoins is based largely on the OG crypto’s stubbornly high dominance levels.
The two major charts to look at are Bitcoin dominance, so that has to be in a downtrend [for altcoins to pop]. At the moment it’s in an uptrend, and other dominance, that has to be in uptrend at the moment it’s in a downtrend.
In this context, “other dominance” refers to the share of the overall cryptocurrency market cap made up of all cryptocurrencies outside the top 10.
While Bitcoin dominance remains high, Bitcoin remains the best bet in the crypto market according to Bird, who added that he “will only ever buy an altcoin if it’s outperforming Bitcoin.”
Bird said that the current global geopolitical turmoil impacting markets doesn’t factor into his decision-making when it comes to Bitcoin. Instead, he prefers to keep things simple, saying that “as long as those sellers are selling higher and those buyers are buying higher I’ll remain long.”
However, he did add that if the BTC price were to drop significantly he would have to rethink his position: “If we break kind of high 80s, like US$88k – US$89k, I would start to worry around then, but while we’re above US$88k – US$89k: completely bullish.”
Bird also suggested the four-year Bitcoin halving cycle that so many investors and commentators believe underpins crypto market performance has never really existed.
The trader said that the halving cycle follows the same timeline as the US election cycle and that it’s largely this latter cycle that exerts enormous influence over all financial markets, including crypto. He advised listeners, “don’t ever follow this four year cycle.”
Related: Altcoin “Banana Zone” Fizzles as Bitcoin Dominance and High Yields Stifle Rally
When Will We See Another Alt-Season?
Bird noted that compared to their 2021 highs, most altcoins are way down against Bitcoin — many by upwards of 90%. “We’re not in alt-season yet,” he explained.
So how could we know when to expect an alt-season?
Bird said he uses multiple charts to get a read on what’s happening in the crypto market, rather than relying on a single chart.
Every week I do an outlook — in crypto I look at Bitcoin, I look at Ethereum, I look at Ethereum/Bitcoin, I look at others dominance, I look at Bitcoin dominance, I look at gold to Bitcoin, I look at S&P 500 to Bitcoin, I look at USDT pair, I look at USDC pair.
ASX Trader The trading guru said using this method means he’s much less prone to misinterpreting a single chart or becoming too focussed on a particular part of the market. “I get a picture of about 12 different charts telling me a story — you can be wrong on one chart, but it’s very rare to be wrong on 12 charts.”
On altcoins specifically, Bird said the Russel 2000 index, a stock market index which tracks 2000 small-to-medium cap US stocks, can be a helpful indicator for future altcoin performance.
Others, which is your altcoins, follows the risk-on, which is the Russel 2000 — if you put them on the same chart together they follow each other perfectly.The Russel 2000 has always been in sync with the S&P 500 except for two times: one is now, and the other time was 18 months before the COVID drop.
ASX Trader Related: Navigating the Illusion of Alt Season and Seizing the Opportunity to Master Trading with ASX Trader
According to Bird, the Russel 2000’s current divergence from the S&P 500 suggests there’s currently a low-risk appetite. When this risk appetite returns, and with it a surge of liquidity, Bird believes we could see risk-on assets, like small-cap stocks and altcoins, perform strongly.