Alts Continue Their Speculative Behavior
Alts have always suffered way more than BTC in a market downturn. Even ETH, which to many is no longer an “alt” but an independent force similar to Bitcoin. Even though this narrative has been quite broadly adopted, it is still very weak in terms of actually being relevant. ETH continues to suffer alongside the majority of the market. Any coin or token with a market cap below the leader will in essence lose more than the leader. After all, that is exactly why it is the leader. However, we are experiencing that though alts are falling alongside BTC, at a greater degree, they are not rising with BTC.
Altcoin Pumps Are Currently Deceptive
It’s currently a case of one step forward, two steps back. Looking to when BTC was at $38K some time back, alts were priced a lot higher than they are now. Alts are not experiencing pumps strong enough to elevate them to previous levels. Unlike BTC, they are performing quite badly, relatively speaking. BTC Is currently down 45% from its previous high, which is also an all-time high. Apart from the top-tier alts, many alts are down 80% to 90% from their highs! If you remember similar losses occurred at the tail end of the previous bear market. BTC lost more than 85% in that bear market! The fact that many alts are at these levels is quite concerning, considering BTC is only down 45%, as I am writing.
A Common Problem
Many of us utilize alts as a way to generate income, forcing us to actually own alts. I think we are all on the same page in that we are aware that safety lies with Bitcoin but we are not going to generate income holding BTC. Of course, you can earn some yield but it doesn’t compare to what is available via the use of altcoins. A very common and well utilized earning opportunity is CAKE, the native token of PancakeSwap. CAKE is currently down in excess of 85% from its recent high at just over $44! This is not an isolated event, as there are numerous cases that share a similar story.
Torum’s XTM token is currently down 92% from its recent boom, largely inspired by partnerships with Huobi and Kucoin. This is the kind of price action one can currently expect and one wonders what will happen if BTC had to correct a full 85% to 90%, similar to past bear markets.
One Sector Is Performing Better Than The Majority
Layer 1 blockchains appear to be holding up a lot better than many of the other niches within the altcoin market. This is probably also due to many of them being in the Top 20, as well as the fact that many are gaining increased adoption off of the back of ETH issues. This is very much why I advocated a modest accumulation of layer 1 blockchains in my January post, “What I Am Buying Now & Why”. As mentioned in the post, the fact that many of these coins are POS is also a big bonus!
Layer 1 blockchains such as FTM and AVAX are down anywhere between 60% and 70%. This doesn’t sound much better than 90% but is actually a lot better once you actually do the maths. I have been buying layer 1 blockchains very modestly over the last while. Something to remember is that once a bottom is in and confirmed, one can always go in heavier.
High Risk Remains A No
For me personally, I am still not adding to more speculative positions, apart from one project which I recently mentioned. High-Risk projects require more confidence in order for me to consider further accumulation. Taking a calculated “gamble” on one project is a different story. Keeping an eye on the Bitcoin dominance is also something that I am doing, as this is always a great indication as to where the market will head next. Looking at the BTC dominance chart below indicates that Bitcoin is still very much in control. There also appears to be a triple bottom pattern playing out that could also propel the BTC dominance higher.
Global events are likely to provide more strength for BTC, rather than altcoins, which could point to a period of extended dominance. Things can always change but this does appear to be the most logical path from here. Keep going, maintain focus and at some point, the tide will turn. See you in the next edition!