Accelerated Altcoin Losses & Why I Don’t Advocate Altcoin Accumulation Yet

No Longer A Leak

The leak on altcoins is something that I addressed at the beginning of 2022. This has continued as a trend throughout the year, apart from a mini altcoin season in March. What needs to be realized now is that this is no longer a leak but a full-blown bleed out! As explained in the above-mentioned article, even though BTC was regaining previous levels, alts were not. Every time that BTC dipped and bounced back, alts would lose a little more value. So, Bitcoin was in essence holding its ground in the previous sideways channel that took place over months, while alts continued to devalue with each dip and bounce. Essentially, falling harder and then bouncing back shorter. What we see now is a lot more severe and serves as a solid confirmation to either avoid altcoin accumulation or to continue very modest dollar-cost averaging.

The Perfect Example

Even though ETH has performed a lot better than the majority of alts it has shown significant weakness over the past 24 hours. The graph below reveals how ETH has returned back to its lows previously seen when BTC fell to $26K during the LUNA fiasco. This particular scenario is a perfect example of how over time alts continue to accelerate losses. Although BTC is currently trading at $29K ETH is trading at the same level it did when BTC was trading at $26K. This will continue until we have a bottom, at least. It could even continue longer.

Image Source – Ftx.com

The blue arrow on the left reveals where ETH was trading when BTC hit $26K and the arrow on the right is pointing to the current price action. You can clearly see that the levels are basically the same and yet BTC is trading almost 10% higher than it did in the same timeframe.

Just To Clarify

Even though I don’t advocate solid altcoin accumulation yet, I do however favor small and regular allocation into preferred alts. This should be minimal and should not affect “Dry Powder” allocations set aside for a bottom reversal. The drop to this key level has given me the confidence to open a few “longs” on ETH and ADA. Cardano is currently trading at $0.45 and ETH has already bounced nicely since opening a position this morning. Further drops down will see me add to these positions, bring down my average, and exit on the next relief bounce. Thanks for reading. Have fun trading this market, it’s the perfect opportunity!

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