Facts and figures show once again that cheaper altcoins don’t always give the highest returns. When investors start trading in altcoins, they have dreams of making it big from cheaper altcoins. Once in the year 2017, many beginners in altcoin trading invested in low priced digital currencies and made huge profits. But this is proved to be a fallacy.
Many cryptocurrency traders believe that Bitcoin won’t be able to rise above 50% or more in a week because $18400 is not feasible. Such investors are moving away from Bitcoins. They have now started to put their money to buy the lesser-priced altcoins with the hope that the cheaper cryptocurrencies will provide greater profits.
As declared in the CoinMarketCap’s price index, 39 of the top 60 altcoins have priced less than $3 on July 12. It is not at all easy for the investors to choose one from these 39. The odds are high for investors who want to get high returns from cheaper altcoins.
After analysis of the cryptocurrency market data for the past few years, it is seen that altcoins can earn you profits even when the crypto market is relatively stable. This is possible when altcoin expands its shares in the market. The time during which this happens is known as altcoin season, and it spans from a few weeks to two months.
Altcoin season begins when there is a drop in the dominance of Bitcoins. Only a 3% decrease in the market share of Bitcoins affects $8 billion in valuation. This shifts the market cap of alternative cryptocurrencies or altcoins to $100 billion. On examining the price data of Bitcoins and altcoins during 15-day periods over the past year, some interesting facts came up. When the cryptocurrency market is bullish or neutral, then there is a rise in the price of altcoins or alternative Bitcoins
Also, when Bitcoin breaks its support level, investors avoid taking risks with altcoins. As a result, the dominance of Bitcoins increases.
There was a 2.2% dip in the recent phase of Bitcoin prices to make it 63.8% on July 11. Dash’s price went up by 21%, EOS was up by 23%, and Ether by 25%. But the prices of low-cost altcoins did not go up. So, in this period also, investing in the cheaper altcoins was not a winning strategy.
On March 12, the price of Bitcoin fell by more than 50% in just eight hours. It recovered a little in the next few weeks but could not break the $7000 price level. Investors moved to altcoin then, and their market cap rallied at $71.6 billion, i.e., an impressive 23.4%. As reported by CoinTelegraph, only 7 out of 41 cheaper altcoins outperformed the market capitalization compared with the average. And 14 of these finished 10% or more behind the
After analyzing the price data for the past four 15-day periods, CoinTelegraph reports that when altcoin surges in comparison to Bitcoin, the three least priced coins outperformed only once. 69% of the “less than $3” altcoins performed worse than the average of altcoin data. So, it was once again proven that investing in cheaper cryptocurrencies is not always profitable during a bullish rally in altcoins.
There may be strategies to increase returns by buying cheaper altcoins during altcoin seasons. But choosing such an altcoin won’t give you a guarantee of higher returns than the market average.