As Bitcoin reaches US$23,800, Litecoin, Dogecoin and high capitalization altcoins recover

The increase of Bitcoin to US$23,800 triggered strong highs in high capitalization, such as Litecoin and Dogecoin.

Litecoin (LTC) and Dogecoin (DOGE) are recovering strongly as Bitcoin (BTC) struggles to stay above US$23,800. Many analysts say the increase in high capitalization altcoins is directly linked to the price of Bitcoin, and historical data shows that the two tend to move together when BTC goes through high and low cycles.

As the altcoins begin to show signs of a new momentum, traders are becoming even more confident in the strength of the BTC trend.

Throughout December, the altcoins stagnated against the Bitcoin Freedom, especially as BTC struggled to break out of the $18,000 to $19,400 range, but this occurred in a tormented low-volume environment.

At the time, the volume of the market for cryptomorphs was in decline, as Bitcoin continuously rejected $19,400. As such, most of the volume went to BTC and the altcoin market was temporarily deprived of trading activity.

Bitcoin’s decline above $20,000 rekindled interest in Litecoin and Dogecoin

Historically, after a great recovery of Bitcoin, the altcoins that existed from 2011 to 2014 tend to increase. These cryptomorphs include companies such as Litecoin, Dogecoin and XRP.

One of the main reasons behind this altcoin rally is volume. Traders like to pump altcoins, causing volume to increase in a short period and with great volatility.

Since these cryptomorphs have significant historical relevance, when a rally begins, its momentum usually lasts longer than other obscure and less capitalized altcoins.

Litecoin, for example, has risen more than 57% in the last 7 days. In the same period, Bitcoin increased 34%, despite exceeding US$23,800 in the main exchanges.

A positive trend that analysts have noticed is that the altcoins are not seeing extreme volatility as in 2017. A trader with a pseudonym called MoonOverlord said:

„One thing that never happened in this race was the panic of people dumping their $ALTS every time $BTC changed 5% in 2017. I swear to God you would look up, bang, alts would be -25% on a 4% BTC move, it was horrible. Tether and stablecoins really didn’t even exist, so you had to be either in the $btc or the $alts. ”

Are the fundamentals driving the current increase?

According to Qiao Wang, a quant trader and researcher at DeFi, Litecoin is not necessarily ‚digital silver‘ in the same way analysts see Bitcoin as ‚digital gold‘.

Since its release, the argument in favor of Litecoin was that it could act as silver if Bitcoin became 2.0 gold. Wang said:

„If you are new to the crypto world, you bought BTC and are wondering which crypto asset is silver for BTC gold. It’s not LTC. IT’S ETH. The other day, Paul Tudor Jones used an interesting analogy from the metal world to categorize crypto assets. There are precious cryptomites. And there are industrial crypts. BTC is precious. ETH is industrial. LTC is neither. ”

Litecoin has several strong fundamental factors that can make the market around it feel better. For example, Litecoin’s team is enabling MimbleWimble, a privacy solution initially designed for Bitcoin.

However, these key factors are not enough to feed a 57% rally in one week. The main reason behind the sharp rise of high capitalization altcoins is probably a volume move by high net worth investors and traders looking to make a quick buck after a Bitcoin rally.