Beyond Bitcoin: Why Long-Term Holders Are Selling and the Rise of Altcoins

As Bitcoin faces strong resistance near the $100,000 mark, investors are increasingly shifting focus to altcoins, particularly those that performed well in the 2021 bull run. Tokens like Decentraland (MANA) and The Sandbox (SAND) are experiencing renewed interest, signaling a potential trend reversal in the cryptocurrency market.

Bitcoin’s Struggle at $100,000

On November 20, Bitcoin narrowly missed the $100,000 threshold, peaking at $99,500 before retreating to $95,719 as of November 28. Institutional investors have been pulling funds from Bitcoin ETFs, with $435.30 million in outflows recorded on November 25 and an additional $122.80 million on November 26, according to Farside Investors.

Altcoins Gain Traction

While Bitcoin consolidates, several altcoins are gaining momentum, drawing interest from both retail and institutional investors. Cardano (ADA), Ripple (XRP), Stellar (XLM), Decentraland (MANA), and The Sandbox (SAND) have seen significant upticks in trading volumes. South Korea's Upbit exchange has been a hub for these trades, often acting as a bellwether for broader market trends.

Metaverse tokens, in particular, have shown robust performance, with MANA up 4.41% and SAND climbing 7.35%. Other notable mentions include Sei, Polkadot (DOT), and Dogecoin (DOGE), which are gaining relevance among active traders.

Ethereum Leads the Altcoin Rally

Ethereum (ETH) stands out among altcoins, with its derivatives market signaling increased bullish sentiment. Open interest in Ethereum futures has surpassed $24 billion, marking a four-month high. Institutional interest in Ethereum ETFs is also rebounding, with $133.60 million in inflows recorded this week.

Implied volatility for Ethereum spiked between November 14 and 27, contrasting with Bitcoin’s flat metrics, indicating a possible rally for ETH in the near term. Analysts predict that Ethereum could test resistance levels at $3,760, with potential for further gains toward $4,093, its March 2024 peak.

Major Wins for Ethereum Ecosystem

Ethereum’s ecosystem received a boost when a U.S. appeals court overturned sanctions on Tornado Cash, a controversial privacy-focused protocol. The court ruled that sanctions on Tornado Cash’s smart contracts were unlawful, a decision praised by Coinbase’s Chief Legal Officer Paul Grewal as a victory for privacy and decentralization.

This legal development, combined with expectations of a more favorable regulatory environment under the new U.S. administration, is fostering optimism about Ethereum’s long-term potential.

Long-Term Bitcoin Holders Take Profits

Long-term Bitcoin holders have reduced their holdings by 3% in November, dropping from 14.09 million to 13.69 million BTC. While the selling pressure has not yet significantly impacted Bitcoin's price, a continued decline in long-term holdings could signal an extended correction.

Strategic Insights

Bitcoin

Bitcoin’s nearest support levels are $88,722 and the imbalance zone between $81,500 and $85,072. Technical indicators, including the RSI and MACD, suggest bearish momentum, making a further correction possible.

Ethereum

Ethereum is positioned for a rally, with an imbalance zone between $3,709 and $3,760 offering a potential 6% upside. Resistance levels at $3,977 and $4,093 could serve as milestones for Ethereum’s price in the coming weeks.

The correlation between Bitcoin and Ethereum remains high at 0.95, meaning traders should monitor Bitcoin’s price movements closely, as any sharp downturn could influence Ethereum’s trajectory.

Conclusion

While Bitcoin consolidates below $100,000, altcoins are emerging as a promising alternative for traders seeking short-term gains. Ethereum, with its strong derivatives activity and ecosystem developments, leads this charge. As long-term Bitcoin holders take profits, the market dynamics suggest a shift toward diversification and strategic opportunities in altcoins.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making investment decisions.