1. Most liquidity in the space goes through Bitcoin. Still most alts have BTC pairs, most derivatives volume is on BTC and it is also frequently used as collateral for margin trading. People can easily sell BTC to get USDT to buy alts.
2. In 2019 from the lows, BTC went up and squeezed all alts. Alts bottomed vs BTC when Binance closed US accounts & Bakkt launched. We saw two smaller ones this year and several in the past.
3. Synthetic BTC longs via ALTUSD (long) & ALTBTC (short) tend to push alts down when BTC rallies hard as it can be cheaper than a BTCUSD long
4. Alts do best when Bitcoin volatility is low as traders play with them, but when volatility on Bitcoin gets back they tend to do badly. Alts are like invesrse Bitcoin options (short Bitcoin vol)
5. Alts are a very inflationary asset class. Lots of new coins coming on the market, most of which have high inflation (airdrops, bounties, teams dumping, high/mining staking rewards etc)...
6. The less BTC on exchanges and the more held by companies like Microstrategy, Square, Grayscale etc... The less BTC can be used to pump alts. However there is still 2.5-3.5M BTC on exchanges that can be used to buy alts (currently ~30-40B, which is higher than the total stablecoin market cap). During the bull run this number could grow even more both because BTC goes up but also as more BTC gets on exchanges like in 2016-2017.
7. So if BTC is scarce on exchanges, while there is an abundance of USDs and with more coming into the market... which asset do you want more? The USD that will flow in in massive quantities or something that is becoming less and less available?
8. Many traders still want to accumulate more BTC as it has the potential to go up 5-10-20x from here, while the USD can't. It is like measuring the stocks in USD or Gold in order to know what your real returns where.
9. Finally pairs trades are very common in markets. You can 'create' them even if they don't exist and trade various assets against each other and not just the USD.
For example why trade EURUSD when EURJPY is cleaner? Why go long EURUSD if the EUR looks awful against most other currencies? It doesn't mean you have to trade the certain pair, but it can help you make better choises.
*BTC has 10x more searches than the term cryptocurrency or Ethereum. For someone to get in, they get through Bitcoin first. The hotter Bitcoin is on the news, the more money is flowing into the market and the closer an alt season is.
Overall I think looking at USD/USDT pairs alone, is a terrible way to trade alts. Focusing on USD profits alone is also a terrible way to view this market as your goal is to accumulate something scarce that has high potential to appreciate, not some trash fiat currency that is getting inflated. How insolent do you have to be that you believe that by accumulating USD you will be able to outperform Bitcoin during its bull run? From here it could do a 10x, so will you get more than a 10x? Is it worth your time to try to beat the market, instead of build on top of what the market gives you?
This doesn't mean that only BTC matters and people should only look at BTC charts, quite the opposite. People need to watch both USD & BTC charts, to have a feeling of where the market is at. People need to know where BTC is in the cycle and what its charts looks like. Some times people need to take profits in USD and not BTC. Some times they need to sell some of their BTC. Some times BTC is so overbought, that alts might look cheap vs BTC but not USD. So both are needed and are useful, as long as you have aUSDT pairs are cleaner and can help you estimate things better when it comes to valuations, but as long as you know where BTC is in the cycle and how over/under valued it is... USDT charts are just a mere tool for TA.
2. In 2019 from the lows, BTC went up and squeezed all alts. Alts bottomed vs BTC when Binance closed US accounts & Bakkt launched. We saw two smaller ones this year and several in the past.
3. Synthetic BTC longs via ALTUSD (long) & ALTBTC (short) tend to push alts down when BTC rallies hard as it can be cheaper than a BTCUSD long
4. Alts do best when Bitcoin volatility is low as traders play with them, but when volatility on Bitcoin gets back they tend to do badly. Alts are like invesrse Bitcoin options (short Bitcoin vol)
5. Alts are a very inflationary asset class. Lots of new coins coming on the market, most of which have high inflation (airdrops, bounties, teams dumping, high/mining staking rewards etc)...
6. The less BTC on exchanges and the more held by companies like Microstrategy, Square, Grayscale etc... The less BTC can be used to pump alts. However there is still 2.5-3.5M BTC on exchanges that can be used to buy alts (currently ~30-40B, which is higher than the total stablecoin market cap). During the bull run this number could grow even more both because BTC goes up but also as more BTC gets on exchanges like in 2016-2017.
7. So if BTC is scarce on exchanges, while there is an abundance of USDs and with more coming into the market... which asset do you want more? The USD that will flow in in massive quantities or something that is becoming less and less available?
8. Many traders still want to accumulate more BTC as it has the potential to go up 5-10-20x from here, while the USD can't. It is like measuring the stocks in USD or Gold in order to know what your real returns where.
9. Finally pairs trades are very common in markets. You can 'create' them even if they don't exist and trade various assets against each other and not just the USD.
For example why trade EURUSD when EURJPY is cleaner? Why go long EURUSD if the EUR looks awful against most other currencies? It doesn't mean you have to trade the certain pair, but it can help you make better choises.
*BTC has 10x more searches than the term cryptocurrency or Ethereum. For someone to get in, they get through Bitcoin first. The hotter Bitcoin is on the news, the more money is flowing into the market and the closer an alt season is.
Overall I think looking at USD/USDT pairs alone, is a terrible way to trade alts. Focusing on USD profits alone is also a terrible way to view this market as your goal is to accumulate something scarce that has high potential to appreciate, not some trash fiat currency that is getting inflated. How insolent do you have to be that you believe that by accumulating USD you will be able to outperform Bitcoin during its bull run? From here it could do a 10x, so will you get more than a 10x? Is it worth your time to try to beat the market, instead of build on top of what the market gives you?
This doesn't mean that only BTC matters and people should only look at BTC charts, quite the opposite. People need to watch both USD & BTC charts, to have a feeling of where the market is at. People need to know where BTC is in the cycle and what its charts looks like. Some times people need to take profits in USD and not BTC. Some times they need to sell some of their BTC. Some times BTC is so overbought, that alts might look cheap vs BTC but not USD. So both are needed and are useful, as long as you have aUSDT pairs are cleaner and can help you estimate things better when it comes to valuations, but as long as you know where BTC is in the cycle and how over/under valued it is... USDT charts are just a mere tool for TA.