Small Cap Index Lead Gains In February, But What Is Bitcoin Doing?


Altcoins have been bigger winners than bitcoin in the recent recovery. While the latter has led the recovery, the smaller capped coins have made all the waves in space, outperforming other indices and including bitcoin. All of this points to an altcoin season after an alleged “crypto winter” and the gains recorded so far in February are further proof of that.

Small Cap Index takes the lead

The entire crypto market had suffered from the downward trend that started in December. However, the second week of February had come to some reprieve with double-digit gains across bitcoin and all indices. The small, mid and large cap indices have all delivered gains so far, but the small cap has taken the lead, with increased bullish momentum in the smaller cap altcoins.

Related literature | Bitcoin Stabilizes Above $45k, US Inflation Comes in at 7.5% YY

Just two weeks into February, the small cap index has seen a whopping 19% gain. This is a huge step forward for the index after it closed out January as the worst performing index, with losses accelerating compared to its counterparts. The tables have turned now as the small cap index gains are 4% higher than all the others.

Small-cap index delivers highest gain | Source: mysterious investigation

Bitcoin, the mid-cap and the large-cap index all delivered double-digit gains for January. Most of the recorded gains came from a single week where prices rose in the crypto market.

What about Bitcoin?

Bitcoin has undoubtedly also delivered impressive gains for its investors over the same period. It may not be as high as the small cap index, but it still remains one of the biggest winners in the space. It follows the movement of market sentiment from extreme negativity back to positive. Also in this case, picking up the momentum has helped.

Related literature | JPMorgan Puts Bitcoin at $150,000 Long-Term, But What About the ‘Fair Value’?

The digital asset is now trading above the 20-day moving average, but remains low on the 50-day average. At the current point, the next resistance for the asset to break is at $45,240. However, a breach above a second resistance point at $46,712 is what will really solidify its entry into another bear rally. Until then, it will likely continue to fluctuate between $43,000 and $44,000.

BTC starts a new recovery trend | Source: BTCUSD on TradingView.com

On the support side, bitcoin’s breakthrough below $43,000 will see its next support at $42,790. It’s not far off, but if it doesn’t hold up, another drop to $40,000 could be imminent.

Nevertheless, the digital asset has shown strong sell signals around the 50 and 100 day moving averages. Unless buyers make significant progress in keeping bitcoin’s price level, bears are more likely to take over, pushing bitcoin into another long drawn down trend.

Featured image from Forbes, charts from Arcane Research and TradingView.com

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