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February 2, 2025

Altcoin Growth Amidst Bitcoin’s Shadow

Altcoin Growth Amidst Bitcoin’s Shadow

It’s that time again. Bitcoin’s back in the spotlight, and as usual, it’s casting quite a shadow over the altcoins. But here’s the real question: can altcoins like NEAR and POL still find a way to grow in Bitcoin’s wake? Let’s dive into this.

Bitcoin’s Dominance Explained

First off, what’s this Bitcoin dominance thing? It’s basically the percentage of the total crypto market cap that Bitcoin holds. When this number goes up, it usually means investors are pouring their cash into Bitcoin and leaving altcoins in the dust. And when it drops? Well, that’s when the altcoins start to shine, at least in theory.

The Relationship Between Bitcoin and Altcoins

Right now, we’re seeing Bitcoin’s performance really dictate how well altcoins like NEAR and POL can grow. Bitcoin’s been retesting some key breakout levels, and guess what? The altcoins have been all over the place. Just look at Polygon (POL) and Near Protocol (NEAR); they’ve tanked 48% and 43% in the last 60 days, respectively. Yeah, not a great look for altcoins.

And let’s not forget about the big boys in institutional investing. With companies like MicroStrategy and Bitcoin-focused ETFs dropping cash into Bitcoin, the usual flow of money into altcoins is pretty much stalled. So, liquidity issues plus high Bitcoin dominance? Not a recipe for altcoin success.

The Mindset of Young Investors

Now, let’s talk about the psychology at play here. Young investors are particularly susceptible to emotional triggers during big market corrections. FOMO, herd mentality — you name it, they feel it. And social media? Well, let’s just say that young investors are on it, which can make things a bit more chaotic.

We also have to consider cognitive biases. Things like overconfidence and loss aversion lead investors to cling to their losing positions, praying for a comeback. This is where understanding psychology can really help in crafting effective trading strategies.

AI and Trading Strategies for Cryptocurrency

But wait, there’s more! AI is entering the chat. Using AI in trading strategies could be the game changer for altcoins, even when Bitcoin’s the top dog. AI trading bots take out the emotional chaos, making trades based on data instead of feelings.

These AI bots are able to analyze massive amounts of data — price movements, trading volumes, social media buzz — and predict trends. They can adjust trading strategies in real time, too, which is a nice touch.

What’s more, these bots can spread investments across multiple exchanges, performing arbitrage and maximizing opportunities. This can be especially useful for altcoins trying to gain traction while Bitcoin’s busy ruling the roost.

Outlook for Altcoins

What’s the takeaway? The road ahead for altcoins like NEAR and POL in this Bitcoin-heavy landscape is uncertain. Their success will hinge on market sentiment, investment patterns, and the savvy use of new trading technologies.

Yeah, the current market is tough. But that doesn’t mean the door’s shut on altcoin recovery and growth. Investors will need to adapt, understand the psychological landscape, and maybe even embrace AI trading. In a world dominated by Bitcoin, altcoins may have a fighting chance yet.

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Egor Romanov
About Author

Egor Romanov is an experienced crypto analyst, professional trader, and author of trading strategies and the Cryptorobotics blog, where he shares his knowledge about cryptocurrencies and financial markets.

Alina Tukaeva
About Proofreader

Alina Tukaeva is a leading expert in the field of cryptocurrencies and FinTech, with extensive experience in business development and project management. Alina is created a training course for beginners in cryptocurrency.

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