Crypto strategist and investor at Texas West Capital, Scott Melker, says it may be wise for traders to get out of Bitcoin’s way.
The leading cryptocurrency has stormed to $8,300 after hitting a monthly low of $6,933 on January 2nd. At this point, Melker says he’s not trading altcoins, and points to Bitcoin’s volume as the key metric to watch during times of increased volatility.
“Price and volume are everything. When price and volume rise together (like they are now), it is incredible bullish. When price rises and volume decreases, watch out. The same goes for the other way. When price is dropping on increasing volume, the bearish trend is likely real.”
In the past, BTC has shown a tendency to suck the life out of altcoins during periods of wild swings.
As Bitcoin’s dominance of the overall market cap rises, the following dynamic can emerge: When Bitcoin pumps, altcoins drop. When Bitcoin drops, altcoins drop some more. The scenario has led to the creation of many a meme depicting BTC as the king of crypto.
Melker says he hopes fellow investors have exited their short-term trades.
As for where BTC will head from here, Melker is looking to see if BTC can hold above $8,200.
“I still think $8200 and $6500 are key levels. $8200 would have people mega bullish. $6500 would have them mega bearish, as we saw when price arrived there. Things could get very interesting soon.”