Market Wrap: Bitcoin Near $53K After Major Drop as Ether Tops $2,800 for First Time

Traders and analysts continue to talk up ether and alternative cryptocurrencies as bitcoin struggles to regain the $64,000 record price level attained weeks ago.

The price of bitcoin was dropping Thursday, going as low as $52,622 and settling at $52,964 as of press time. There’s been an almost $3,000 price change over the past 24 hours for the world’s oldest cryptocurrency, ranging from $55,851 down to $52,622.

It’s the season for alternative cryptocurrencies, or “alts,” according to Rich Rosenblum, president of crypto market maker GSR. This might help explain why bitcoin has suddenly lost some of the momentum seen earlier this week. 

“When new money flows into BTC, people are less focused on alts,” Rosenblum told CoinDesk. “Once it feels like the bullish pattern for BTC breaks down, people roll some of those profits into alts.”

The market dominance of bitcoin continues to decline, and it’s less than half of the total blockchain market Thursday. At 49.5% at press time it is down from 73% at the start of 2021. 

“Crypto natives might be taking profits in BTC to free up some capital to invest in alts,” Rosenblum said.

Zachary Friedman, chief operating officer at quantitative firm GDA Capital, senses bitcoin’s rally might just be pausing.  

“As we have seen with most bull cycles, bitcoin typically leads the charge,” Friedman said. “Once bitcoin tops, money is redistributed into altcoins, which marks the nearing end of these cycles, historically.”

While ether keeps pushing to new highs almost daily, bitcoin’s all-time high above $64,400 came two weeks ago. 

For now, BTC is out of the limelight. 

“Ether and alts will likely keep up the bulk of the action for the next leg of this cycle,” Friedman said. 

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Ether (ETH) rallied to a fresh all-time high Thursday around $2,800, before fading later in the day.  

The second-largest cryptocurrency by market capitalization was trading around $2,708 as of 21:00 UTC (4:00 p.m. ET), down 0.75% over the prior 24 hours. 

“Since the end of March, we’ve seen ETH going stronger against BTC,” said Élie Le Rest, partner at crypto quantitative trading firm ExoAlpha. 

The technical proposal EIP 1559 to fix the Ethereum blockchain’s problematic capacity constraints may be aiding in the bullish sentiment. 

“This bullish trend on ETH may be seen through different angles, but the upcoming upgrade including EIP 1559 is seen as a strong catalyst of the recent ETH bull run,” Le Rest said. 

Jason Lau, chief operating office of San Francisco-based exchange OKCoin, said ether appears to have decoupled from bitcoin. 

“This is significant as ETH/BTC had been in the ~0.02-0.04 BTC range for almost the past two years, but recently just hit ~0.05 BTC” Lau said. 

As of press time, the ETH/BTC pair, which signals traders rotating in and out of bitcoin into and from ether, is up 2.6% and well over 0.05 BTC. It has been mega bullish since April 27. 

“The [non-fungible token] boom, recent scalability improvements, Ethereum protocol upgrades and DeFi growth have all contributed,” Lau said. “Those upcoming features are a great incentive for investors to tag along, contributing to ETH against BTC” 

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One of the biggest gainers in the altcoin space this year is Binance coin (BNB), an asset used to offset trading fees charged on the Binance exchange. On a percentage basis, BNB’s dominance, the share it takes up of total crypto market capitalization, has gained over 550% since the start of 2021. As of press time, BNB’s market dominance is at 4.4%.

Digital assets on the CoinDesk 20 are all in the red Thursday. Notable losers as of 21:00 UTC (4:00 p.m. ET):

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