Investors Build
The Cryptocurrency space is, for the most part, driven by speculation. Many investment opportunities have a very short window period and short-lived gains. Yesterday, I discussed a particular altcoin I purchased in 2020 for $0.01. In 2021, it surged to $4.64 and is trading at $0.04 today. This is how this market operates. Outside of BTC, it’s difficult to identify projects that offer reasonable volatility concerning long-term investments.
It makes little sense to accumulate a coin or token at a dollar when it will be trading at a few cents within a year or two. Statistically, altcoins correct 95% during a bear market. Having a long-term altcoin position violates basic investment principles, not to mention common sense. So, how can altcoin investors build long-term positions, especially if they shift to stablecoins in bearish seasons? This is a challenging dilemma.
I have always advocated for a complete transition to stablecoins at the peak of a bull market and still maintain this view. However, there are various reasons investors might want to have exposure to investments over a longer time frame. So, what can they do to achieve this objective? The obvious answer is Crypto assets, which fall within the RWA sector. However, there are very distinctive categorizations within this particular niche.
The Unpopular Truth
As an altcoin investor, having a long-term dollar-cost averaging strategy is unfruitful unless you halt and stagger accumulation. Let me explain. If investors are early enough regarding their particular altcoin, they can cease accumulation at a cycle peak and then deploy investment capital into stablecoins. They can then re-enter the market at lower levels.
This approach significantly increases the accumulation rate. Continuously deploying capital regarding an altcoin is unwise. However, exceptions can be made if the project is still insignificantly valued in market cap. In other words, when it does begin rallying, the upside will be enormous due to the tiny market cap. However, an investor needs conviction to follow this path.
Tokenized real-world assets will play a much more significant role in altcoin portfolios as altcoin gains become increasingly challenging to acquire. This dynamic will be an additional driving force regarding the ascent of the RWA sector. For years, I have been saying that RWA will be a leading narrative of the decade. However, I envision much of this at the end of the decade.
Alternatively, investors can consider ongoing accumulation in altcoins such as Hive, especially if they are creators, as holdings impact one’s influence within the ecosystem. Altcoins are unlike gold or real estate, where an ongoing DCA approach is an effective strategy. However, this dynamic has a positive side; it reveals how early we are regarding Crypto as an asset class.
RWA and DeFi are likely to provide viable opportunities during long-term bearish trends. However, market participants are still relatively ignorant regarding the possibilities within RWA-based DeFi protocols. A surge in the RWA sector is likely to promote awareness.
For now, altcoins are still very much tethered to one another. The industry’s maturation, especially within DeFi and RWA, will bring about a dynamic unique to the altcoin market. In other words, particular assets within specific sectors will perform significantly better than the altcoin index during a bear market.
Final Thoughts
Altcoins are another animal! This cycle has been challenging thus far. I still envision some serious gains for altcoins. However, a high tide is no longer raising all the boats in the harbor. Identifying gains will become difficult as the industry matures, especially for newcomers. Fortunately, we have memecoins and can still exercise our Degen appetites. All the best, see you next time!
Sapphire Crypto 