Bitcoin vs. Altcoins: A Story of Six Coins and Two Outliers

2022.08.05 21:18

Bitcoin vs. Altcoins is a hot topic, and there are several large groups sharing a school of thought and millions of individuals with their own views. This may or may not change your opinion.

However, whether you are a bitcoin maximalist, some other kind of maximalist, swing trader or investor exploring cryptocurrencies, I wrote this with the goal that you would get some valuable knowledge out of this. These data points and conclusions are provided for your usage.

As of this writing, there are now over 20,450 cryptocurrencies listed on CoinMarketCap. Pretty much every school of thought agrees that this is too much, and that over 90% of these projects are failures at best.

Let’s explore some charts courtesy of TradingView. Normally you see charts as a cryptocurrency versus the US Dollar. All of the charts below compare the cryptocurrency against bitcoin.

Ether

First off, ETH/BTC. Ether, the native token of the Ethereum network, is the largest altcoin, and it has many proponents insisting that it will “flippen” or overtake bitcoin in market capitalization someday, even someday soon.

It has the following going for it:

• #2 market capitalization
• The “merge” moving from Proof-of-Work to Proof-of-Stake, currently on schedule for late September.
• More money is transacted on the Ethereum network than bitcoin daily.

Here is what it doesn’t have going for it:

ETH/BTC

ETH/BTC weekly candles. Courtesy of TradingView.

ETH/BTC barely reached half its ATH in the 2021 bull run vs. the 2017 bull run.

To be clear, this is the price per coin, not market capitalization. That being said, at one time ETH had no limit to the number of coins that could be newly mined. In 2021, Ethereum went through a network upgrade so that it would become disinflationary, with a portion of its supply regularly burned.

This should help its overall token price long-term, but also will mean that it won’t outpace bitcoin by simply mining more coins.

Bitcoin Cash

Bitcoin split or “forked” on August 1, 2017, over a disagreement regarding changing its code and working structure. As a result, two blockchains were created from the original chain. Bitcoin “core” as it was called and “Bitcoin Cash” resulted. Roger Ver, Craig Wright and Jihan Wu were some of the leaders of the Bitcoin Cash community at the time.

Bitcoin Cash originally had a lot of support and was a Top 5 cryptocurrency for quite some time. It eventually had its own contentious hard fork in 2018, resulting in Bitcoin SV, led by Craig Wright.

BCH/BTC

BCH/BTC weekly candles. Courtesy of TradingView.

Now looking at the numbers again, which are actually very hard to see, since at its peak in the 2021 bull run, BCH/BTC barely reached 1/10 of its peak in the 2017 bull run.

Litecoin

Litecoin is another Proof-of-Work cryptocurrency which has been around since 2014, so we are actually able to somewhat view three bull runs. No major controversies to explain any collapse for Litecoin.

LTC/BTC

LTC/BTC monthly candles. Courtesy of TradingView.

EOS

Now let’s explore an even more extreme case, EOS. The token was issued by a company based in Hong Kong called Block.one. It was once a Top 10 cryptocurrency and one of the largest ICOs of 2017.

It appears that their largest accomplishment seems to have been to use their token sale to buy 140,000 bitcoin, currently valued at around $3.2 billion.

EOS/BTC

EOS/BTC weekly candles. Courtesy of TradingView.

It’s actually very hard to reach this chart, since EOS/BTC is down over 90% since token launch, but you can see a small blip in late May 2021, compared to its initial spike in May 2018.

Monero & ZCash

Here is the chart for the long-term privacy coin, Monero:

6_XMRBTC_2022-08-04_12-05-32

XMR/BTC weekly candles. Courtesy of TradingView.

Its 2021 bull market peak is about 1/3 of its 2018 bull market peak.

Now let’s take a look at another privacy coin, ZCash, which I believe is the only privacy coin available on a U.S.-regulated crypto exchange (Gemini):

7_ZECBTC_2022-08-04_12-14-59

ZEC/BTC weekly candles. Courtesy of TradingView.

XRP

And just to get some variety, let’s look at XRP, which is currently a Top 10 cryptocurrency.

8_XRPBTC_2022-08-04_12-54-07

XRP/BTC weekly candles. Courtesy of TradingView.

One could argue that the ongoing SEC vs. Ripple lawsuit has affected token price, since XRP was delisted from US exchanges after the start of the lawsuit. That being said, the 2021 bull market peak is about 1/4 of the early 2018 bull market peak.

I don’t need to show you 1,000 charts.

Outliers

I observed two outliers.

One is Dogecoin. The long-term altcoin was originally a fork (copy) of Litecoin that Jackson Palmer and Billy and was itself a joke, intended to make fun of crypto.

It has always been popular to traders due to its volatile nature even before the 100x pump of 2021.

DOGE/BTC

DOGE/BTC weekly candles. Courtesy of TradingView.

This was part of the meme coin craze of early 2021, following GameStop (NYSE:GME) and AMC’s pumps, and it was fueled by celebrity support from Elon Musk, Mark Cuban and others. Thus I do not consider this to be a sustainable or predictable trend.

All jokes aside, here is the other outlier I see here.

Binance Coin, BNB, which is tied to one of the world’s two largest and most profitable crypto exchanges, Binance. Binance has built a massive crypto empire and community. Their exchange’s token is possibly the most successful ICO ever.

BNB actually outperformed BTC in the last bear market and bull market.

BNB/BTC

BNB/BTC weekly candles. Courtesy of TradingView.

Feel free to drop any actual outliers you find in the comments. Please don’t shill or I will block you immediately.

Conclusions

From this it could be surmised, that these are the rule, with few exceptions:

1. Bitcoin outperforms altcoins in bear markets.
2. Altcoins outperform bitcoin in bull markets.
3. During bull markets, swing traders tend to buy altcoins.
4. During the middle and end of bull markets, swing traders tend to take profit, selling altcoins into bitcoin, stable coins and fiat.
5. Altcoins that survive do progressively worse in the next bull market against BTC.

This article was originally published on the The Latest Block.

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