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Friday, July 1, 2022

Giving A Second Look At Altcoins: Looking Beyond Bitcoins

While the big gun hitting all-time highs, altcoins are also getting to bask in the sun. the combined market value of all cryptocurrencies has doubled in 2021. 2022 promises to be the year of altcoins, alternative currencies that are not Bitcoin.

The cryptocurrency market has experienced a bull run in October which spilled into November. Experts claimed that it was the altcoins season. While Ethereum has been among the biggest gainers, smaller coins gained even more in terms of percentage as they were underpriced compared to the bigger ones.

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Investors have eyes on these altcoins that have more potential for growth and could bring in much larger profits than BTC.

It is time to give a second look at the notion that cryptocurrencies are a risky class of assets. Many feel that such coins like other cryptocurrencies perform well when investors are positive and adventurous and slide when they become nervous.

But since these coins area a wager on the future, it is natural that it will be risk-on. Since big money is going to shift to and move in the blockchain, it is good to own blockchain money and play it reasonably.

Altcoins And Regular Assets Unrelated And Could Help Create A Diverse Portfolio

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Data proves that there is statistically no link between bitcoin and regular stocks. The same goes for gold. Gold and bitcoin do not trade together either.

Experts give several reasons why bitcoins and these coins do not correlate with major macro assets. One is the value proposition. Another is that cryptocurrencies are controlled by only a handful of players as they are still in their infancy.

This low correlation with macro asset classes makes altcoins something to be considered as a diversification portfolio. The downside remains that non-stable cryptocurrencies are dreadfully unpredictable and volatile.

There are indications that 2022 will see altcoins become even more uncorrelated with bitcoin, which again is uncorrelated to macro assets. This will lead to a situation where managers of the traditional portfolio will be forced to give altcoins a once-over even if a minimum merely to have a diversified portfolio.

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