The Asset Of Choice
For the most part, the majority of Crypto enthusiasts arrived in 2020 and beyond. The mainstream soon forgot the bull run of 2017. However, with the pandemic, inflation, and the MicroStrategy (now Strategy) Bitcoin business model, Bitcoin began garnering fresh attention. The altcoin explosion in 2021 was almost as impressive as the ICO boom of the previous cycle. Crypto was back, and this time, it appeared to be for good!
It wasn’t long before the FTX debacle made headlines. It was the beginning of an implosion, thanks to the greed and dubious behavior of SBF and other shady industry leaders. What many don’t realize is that if it weren’t Sam Bankman-Fried and company, it would have been some other event, or series of events. Bear markets were business as usual for Bitcoin and the broader Crypto market back then.
I use the term “were” because I believe market corrections will no longer suffer the intense drawdowns of the past. Interestingly, Bitcoin’s correction in 2022 was relatively mild compared to the previous cycle. If memory serves, the bear market correction of 2018 was approximately 6% deeper. Considering the events surrounding FTX, Celsius, and Terra Luna, one would have expected a much more aggressive correction.
Bitcoin and Crypto remain volatile assets. However, BTC is becoming increasingly stable and steady as it gains mainstream and corporate adoption. Instead of a 70% to 80% correction, I would expect a bear market correction for BTC to be somewhere in the vicinity of 50% to 60%. TradFi investors will likely still find such a correction unpalatable. However, for OGs like me, this would be a breeze.
The Altcoin Challenge
Altcoins are likely to face increasing difficulties in realizing significant market caps, achieving widespread adoption, and achieving overall success. Altcoins tend to experience very brief moments of success. As mentioned in a previous article, the majority of an altcoin’s gains typically occur within a matter of weeks, particularly during the final stages of a bull market. Furthermore, those gains are usually lost within a matter of weeks or months.
Altcoins that emerge unexpectedly are the dark horses that provide investors with secure gains. In the previous cycle, Solana burst into prominence from an ICO price of $0.22. Solana went on to peak above $250, ensuring early investors with unshakable gains. Although the FTX collapse heavily impacted Solana, it still managed to hold above the $8 mark. Anyone who purchased SOL below a dollar was in safe hands.
Once again, investors face a similar challenge: identifying tomorrow’s leaders. Kaspa was an interesting scenario during the previous bear market. It rallied significantly in the heart of a bear market. Such a move is almost unheard of in the altcoin space. Altcoins tend only to bleed out during bear markets. To remain stable would be impressive. However, to rally thousands of percent is almost unthinkable.
Altcoin investors will need to improve their strategy. That being said, we are yet to experience a significant move from altcoins in the current cycle. However, I would still expect most altcoins to surrender much of their gains in a broader market correction after such a rally. Remember, altcoin investors are weary. It’s been a long wait, and nothing much has happened. Powerful moves will subsequently experience heavy selling pressure.
Final Thoughts
Bitcoin remains a great asset as a savings vehicle. Gains will become increasingly marginalized as adoption increases. Altcoins remain a viable alternative for wealth creation. However, the stakes are now much higher. To succeed, you need to be familiar with the market and possess extensive experience and a deep understanding of altcoin investing. Staking can often serve as a form of hedging by increasing coin holdings over time. All the best, see you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in my receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.