Altcoins are deep in the red today, dragged down by Bitcoin prices feeling the weight of the MtGox collapse.
The majority of coins are off by well over 10%, including the top 15. Litecoin, Peercoin, Dogecoin, Nxt, Mastercoin and Namecoin are all down by 12-14%.
The sell-off is to be expected considering the parallel treatment delivered to Bitcoin (BTC), which has declined steeply as traders grow nervous about its outlook.
Interesting this time around, however, are two related anomalies: Bitcoin initially fell by as much as 30% on Bitstamp and BTC-e, but has since resurfaced above $500 on both exchanges, making for roughly a 17% net decline. During other scares over the past few weeks leading up to the collapse, BTC experienced similar declines (outside of MtGox). One would expect a event of such epic proportions to keep BTC from recovering from its 30% loss and even send it lower.
The second anomaly is the altcoin behavior. Typically they exhibit amplified movements on the scale of 2-2.5x relative to Bitcoin during such periods. Today, many are unchanged relative to Bitcoin and some have actually increased in BTC value.
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Litecoin, trading at $12.40 today, is highly resilient at 26 mBTC- a level we discussed as LTC was struggling several weeks ago. It has maintained a relatively flat profile near 25.5 mBTC over the prior 2 weeks and had increased vs BTC today.
Dogecoin, after joining the others in a quick dive to 175 Satoshi, remains virtually unchanged.
Clearly, and as discussed previously, today’s downturn does not resemble most others where all of cryptocurrency gets punished due to some common threat. Most traders, after the initial shock, are 80% confident that MtGox’s collapse is largely self-contained. Also, many will attribute, at least psychologically, today’s declines specifically to Bitcoin, perhaps suspecting the cryptocurrency more vulnerable to security-related calamities. In addition, it is only natural for a beaten and battered investor to look favorably toward alternative investments for which he has not experienced such grief.
Indeed, comments are creeping up around the web advocating this as a time to get into altcoins like Protoshares, saying this is where the future lies. One comment in the BTC-e chat reads: “Good news: No more waiting for LTC to go Gox, now Goxers come here to buy some LTC, NMC and others!”