hile Bitcoin encountered resistance around the $43,000 level this week, major altcoins Ether and Solana powered ahead to new yearly highs. Their upward momentum saw ETH climb over 5% and SOL rally more than 8%, outperforming the stalled Bitcoin.
However, concerns over a potential 'bull trap' have emerged, raising doubts if this recent crypto rally can hold.
Altcoin Outperformance
As Bitcoin took a breather, Ether successfully broke above its 200-day moving average to reach $2,372 – its loftiest price point since May 2022. This ETH rally helped lift other Ethereum ecosystem tokens like Optimism, Arbitrum and EtherClassic that gained double-digits in some cases.
Native cryptocurrency of the Solana blockchain, SOL also had a strong session. It jumped 8% to hit $69, adding to three-week gains off mid-November lows. Social mentions hinting at a $100 price target for SOL attracted buying momentum.
The outperformance of major altcoins put the wider CoinDesk Market Index (CMI) in slight positive territory for the day. However, Bitcoin's inability to hold above $43,000 has raised red flags for some.
Looming Bearish Threat
Social media analytics firm Santiment noticed rising fears of a "bull trap" playing out in crypto markets currently. A bull trap refers to a temporary rally that lures in more buyers only to see prices reverse sharply lower.
If disbelief over the rally's authenticity increases further, Santiment argues it could drive Bitcoin towards $50,000 by squeezing out short sellers holding bearish bets. However, failure to break key resistances raises the possibility of a downtrend resumption.
While Ether and Solana prices hit new floors, traders remain divided on Bitcoin's next move.
A daily close above $43,000 would add credence to continuation of this upswing.
But signs of distribution there could see altcoins reverse lower to align with a Bitcoin downward correction. The bull trap threat is one to watch closely in coming sessions.
