Crypto Mythbusting: Do altcoins really pump after BTC moves? A data-backed analysis.

(This is a five-minute read)

Or, at least, that’s what the internet says. After parabolic moves by Bitcoin, common wisdom tells us altcoins pump shortly after.

On the heels of this latest Bitcoin all-time-high, will it happen again? We can never be sure, but we can use data from the past to better inform our investing decisions.

The Data

Today, we’ll be looking at four time periods where Bitcoin pumped, then seeing if altcoins followed along in its path. This is admittedly not a lot of data-you could even argue its merely anecdotal. But if we see that altcoins performed well every time, well, it’s probably enough to reallocate some capital to an alt portfolio make sure we’re well exposed, just in case.

To analyze altcoins as a basket, we’ll look at two charts. First, the Total 2 Index, which shows the total market cap of the top 125 cryptos without BTC. This index is not static, meaning altcoins are constantly entering and falling off of the list.

Second, we’ll look at Bitcoin dominance, as if altcoins pump but Bitcoin dominance stays the same, your money was better off in Bitcoin (a less risky asset).

The Moves

The four Bitcoin moves we’ll be looking at are the following. I picked three Bitcoin pumps in bull markets, as we’re definitely in a bullish time period, but I also picked a +80% move from 2018 to see how altcoins might behave during bear markets.

Since crypto markets seem to have a recency bias (today’s price movement tends to trace recent patterns more than patterns from several years ago), two of these time periods will be taken from the ‘current bull run,’ which I consider to be the extended move from the local low in March 2020.

  1. End of 2017 Bull Run: 11/13/2017 – 12/16/2017, +242%, $6,000 – $20,000
  2. Bear Market Pump: 6/10/2019 – 6/26/2016, +82%, $7,500 – $13,000
  3. New ATH: 12/12/21 – 1/08/21, +134%, $18,000 – $45,000
  4. Summer 2021 Pump: 7/21/21 – 7/30/21, +44%, $29,000 – $42,000

End of 2017 Bull Run

  • 11/13/2017 – 12/16/2017
  • +242%
  • $6,000 – $20,000

A 242% gain in about 33 days might never happen to Bitcoin again, but if you were early enough to be there, it was mind-blowing. It was a time of infinite optimism and maybe that’s why alts surged after the ATH.

During this month-long bitcoin pump, the market cap of the top 125 altcoins moved up by 184%, meaning Bitcoin dominance went up and your money was better off in Bitcoin.

Still, not a bad result for a month of investing. But as Bitcoin dropped 23% from the 16th of December to the 4th of January, altcoins continued to pump another 123% for a total gain of 544% over 54 days: over 10% a day on average. That’s a handy little gain.

Results: Altcoins pumped alongside Bitcoin, then continued to pump another 123% while Bitcoin retraced.

Bear Market Pump

  • 6/10/2019 – 6/26/2016
  • +82%
  • $7500 – $13000

This move is a bit different than the others, coming in the midst of a pretty serious bear market. Nonetheless, from April to June 2019, Bitcoin tripled in price, with a final 16-day crescendo coming in early summer. Bitcoin put in a near 2x move, coming within striking distance of the all time high.

Altcoins pumped about 45% alongside Bitcoin’s 82% move upwards, but afterwards? A whole lot of nothing. Over the next 22 days, Bitcoin erased its gains with a 50% drop while altcoins also got smoked, dropping 80%. While the total market cap of the top 125 altcoins hit a local high on June 26 of around 140 billion, it would take over a year to reach those levels again on August 26, 2020.

Results: Over this time period, your money was better off in Bitcoin on the way up and the way down. Bitcoin dominance, with a few small slides, trended up from about 50% of total crypto market cap to nearly 75%. A blowout victory for $BTC bulls.

2020 Q4 All-Time-High

  • 12/12/21 – 1/08/21
  • +134%
  • $18,000 – $45,000

In this euphoric, 134%, 27-day move, Bitcoin doubled its previous ATH with only five red days. It was a Bitcoiner’s wildest dream, and the Q4 move everyone has fixated on since. Bitcoin bulls love this move because after an 18-day, -28% retracement in January, it shot up again another 41% through the end of January and beginning of February.

But what happened to alts during and after the pump? During the BTC pump, the top 125 alts saw a 74% gain. So Bitcoin dominance went up, but not by much.

It was during Bitcoin’s drop that altcoins flew. After Bitcoin reached a local top on the 8th of January, it collapsed by 15% and altcoins responded negatively with a 20% drop. But while Bitcoin continued to trend down with another 25% dip from the 14th to the 28th, alts put in a 33% move to the upside. After that, altcoins enjoyed a 100-day, 349% move upwards through May 12th. Bitcoin dominance slid 33% from 60% to 40%, a near all-time-low level. This was peak altcoin season.

Let’s keep in mind that Bitcoin although enjoying a few new all time highs throughout this period, Bitcoin dominance slid lower and lower. Bitcoin wasn’t a bad investment by any means, but alts performed phenomenally.

Results: A euphoric, monthlong pump doubled the former ATH for Bitcoin and lead to a lot of very happy altcoin investors. Bitcoin dominance steadily trended down although price trended up.

Summer 2021 Pump

  • 7/21/21 – 7/30/21
  • +44%
  • $29,000 – $42,000

Pulling the market out of a three-month bleed, this nine-day move pumped Bitcoin’s price by up 44%. It’s the smallest Bitcoin pump we’re covering but also the most recent, which might give us clues as to how today’s market behaves.

Bitcoin dominance trended down about 20% over this time period even though Bitcoin price trended up. Altcoins exploded, with the top 125 by market cap increasing a total of 134%. People cite it as an example of the power of a slow and steady climbing Bitcoin. It’s a rising tide that lifts all boats. For the record, Bitcoin climbed about 50% over this time period.

Results: A steadily increasing Bitcoin lead to a nice pump for altcoins. Everyone was happy, but it wasn’t peak euphoria, and Bitcoin dominance fell.

What Does This Mean for Today?

Saying “this has to happen exactly this way” is dangerous and can lead you to some serious blunders. However, while I can’t guarantee that any of these will happen, I think there are a few possibilities that are worth keeping an eye out for if you’re an altcoin investor.

First, let’s look at the chart today (October 21st): we’re experiencing our first real down day after a 60%, 21-day move, pushing to an ATH but seemingly getting rejected. Bitcoin dominance has been trending up for a month to its highest high since August.

  • An ATH rejection, then breakout: An ATH rejection followed by a breakout, would most likely put an ‘altcoin season’ on hold, but would still be good news for altcoins. As we’ve seen, when Bitcoin pumps, altcoins pump, just not as much. Maybe after a big move and a retracement, we’d finally see a real altcoin season. Bitcoin dominance is still pretty low compared to historical levels, so it’s possible we need to see it take some market cap back before altcoins can run.
  • Bitcoin stability: If Bitcoin just hangs out within $5k-sh of where it is today, altcoins will probably run. That chart would look pretty similar to our late 2017/early 2018 altcoin season, but could signal an end to the bull run.
  • Bitcoin dips: Bitcoin could still take a dip, and that could mean who-knows-what for altcoins. In 2019, it was bad for alts, in the winter of 2020/2021, it was great for alts. On the bright side, it would probably mean an extended bull run, as pretty much every BTC all time high has been followed by an explosion to higher levels.

If history tells us anything, it’s that altcoin pumps nearly always follow big Bitcoin moves: as to how big those moves are and how long after new Bitcoin ATHs they come, that’s anyone guess. These are a few possibilities I’ve deemed to be pretty likely, and I, for one, am stocking up on altcoins.

The normal advice still stands: stay diversified, own Bitcoin as a backup, and have a plan to take profits.