The Fed’s decision to hike interest rates for the first time since 2018 to combat growing inflation has sparked a reaction from global financial markets, including Bitcoin.
Bitcoin has lost nearly half of its value after hitting an all-time high of $69,020 in November 2021. The bottom of the decline as Bitcoin continued to move lower reached $33K on January 24, and the digital asset is now up 16 percent at current pricing.
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3c4d8b1c.png)
Let’s take a broader look at the market on a larger scale and over a longer period of time, focusing on major altcoins with strong fundamentals from the market’s peak.
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3c7ae41c.png)
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3c8c998f.png)
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![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3cd6acdb.png)
The charts reveal that major altcoins have lost more than 70% of their value since their peak. Let’s revisit these Altcoins since the Bitcoin trend bottom on January 24.
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3cea5ac2.png)
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3d022c89.png)
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3d17c804.png)
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3d2c53a6.png)
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3d414f30.png)
![](https://todayincrypto.com/wp-content/uploads/2022/05/img_626ea3d56aaeb.png)
While bitcoin has recorded higher lows, the current price is 16 percent higher than it was on January 24th, according to the charts.
Now, my understanding is that we had a capital transition from Altcoin to Bitcoin during this strong bitcoin sell-off (since January 24). However, this cash flow has yet to be fully deployed (cash on the sidelines), and 90% of altcoins do not go below 70%.
As long as the bulk of altcoins do not suffer further, then there will be a continued Bitcoin aggressive sell-off.
This implies that:
- The major player’s capital has changed from weak hands (Altcoin) to strong hands (Bitcoin)
- Weak hodlers (Altcoin) because of excessive falling, and strong hodlers (Bitcoin) because of supply exhaustion and slowdown
According to the following scenario, at least 80% of altcoins, even the good ones, could lose more than 70% of their value since the December high, and the sell-off may not necessarily mean Bitcoin’s will form a lower bottom.
You can then wait for capital to flow (from Altcoins to Bitcoin), prompting altcoins to suffer further while Bitcoin’s dominance rises, before a new rally begins.
To wrap up my analysis, I’d want to point out that all cryptocurrencies have experienced market downturns in previous cycles. As a result, it is preferable to examine the market free of psychological prejudices and attempt to deal with it using proper analysis. I hope you find my assessment to be helpful.