While so-called altcoins enjoyed a notable rally early this week, this run appears to be over.
The market for alternative cryptocurrencies, a collection of digital tokens with different blockchain networks and value propositions than the bitcoin protocol, received significant tailwinds earlier this week as bitcoin traders sat on the sidelines waiting to hear the latest news from China.
As bitcoin trading volumes fell at many exchanges, many of the top cryptocurrencies listed on CoinMarketCap (ranked by market capitalization) enjoyed notable price gains, forming what could be referred to as a smaller altcoin rally.
Today, however, we saw a sharp reversal of this trend.
The ether markets provided a perfect example.
Ether, the digital currency that powers the smart contract-based blockchain platform ethereum, surged nearly 20% to $13.33 on CoinMarketCap on 14th February, reaching their highest value so far this year.
Analysts pointed to robust trading volume, a highly leveraged market and signs of rising adoption as helping fuel this price rise.
However, the digital currency has fallen back, dropping to $12.64 today. At the time of report, ether was trading at $12.71.
Privacy coins taper off
Monero, a privacy-oriented digital currency that leverages ring signatures to conceal user identities, also provided strong evidence that the rally enjoyed by altcoins earlier this week is now over.
The privacy oriented digital currency rose roughly 12% from $12.20 on 14th February to $13.74 on 15th February, its highest price in more than a month, CoinMarketCap figures reveal.
However, monero lost much of its recent gains when it dropped to $13.26 later in the 15th February session, and failed to mount any notable recoveries since that time.
Instead, the digital currency has moved largely within a reasonably tight range between $13.30 and $13.60.
Elsewhere, dash, a digital currency that offers users privacy and instant transactions, rose 8.6% to $19.66 on 15th February, but fell back to $18.75 later that session, CoinMarketCap figures show.
Bitcoin back in focus?
As for what caused the altcoin rally to end, one simple explanation is that cryptocurrency traders have once again become interested in bitcoin.
Far and away the market’s largest asset, bitcoin has seen its price climb more than 5% since falling to $1,001 early in the 15th February session, CoinDesk USD Bitcoin Price Index (BPI) data shows.
At the time of report, bitcoin was trading at $1,056.92, 2.2% higher for the data, BPI figures reveal.
This recent uptick in price has coincided with a notable increase in volume, as market participants traded 16,000 bitcoins worth of transactions through Bitfinex in the 24 hours through 21:30 UTC.
This compares to an average of 9,700 bitcoins per session over the last seven days, Bitcoinity data shows.
Tim Enneking, chairman of the digital asset hedge fund Crypto Asset Management, explained in this way:
“Since bitcoin jumped up again, the alts have cooled off.”
Melting snowman image via Shutterstock
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