Understanding Why It’s Crucial to Benchmark Altcoins Against Bitcoin Instead of USD: Performance Insights on $KAS, $BTC, and $ADA.
In Brief
Cunning investors are shifting their attention from the USD valuation of altcoins to their performance against Bitcoin pairs, especially since many altcoins are losing value when compared to Bitcoin.
Many altcoins consistently diminish in value against Bitcoin pairings. Intelligent traders prioritize monitoring the performance of their altcoins against $BTC rather than the USD value, as this strategy can fundamentally alter their trading approaches.
The Cardano (ADA) Lesson
Cardano ($ADA) saw remarkable growth in December 2017, with its price surging from $0.38 to $1.10 by early 2018. However, it later plummeted to a staggering 0.035 USD, representing a staggering 97% decline. By 2021, it had bounced back to $3 per token, only to fall back down to $0.35 in 2024. The lesson learned? Altcoins can be wildly erratic and often disappointing when evaluated in USD.
Source: https://www.tradingview.com/x/7XlDhTCQ/
Let's delve deeper into this situation. Imagine purchasing $ADA at around $0.38 on December 17, 2017, right as interest in cryptocurrencies was reaching a fever pitch. The thrill in the air is palpable, and within a short span, the price skyrockets to $1.10. Feeling triumphant, you enjoy a nearly threefold return on your investment, leading you to believe that the upside is just beginning.
Big mistake
However, instead of continuing its rise, Cardano starts to decline. Fast forward two years, and your initial investment has dropped to $0.035 per token. You face a nearly 90% loss, yet you cling to hope, certain that a recovery is just on the horizon.
By early September 2021, a bit of a breakthrough occurs— Cardano unexpectedly climbs to nearly $3 per token, yielding an impressive 800% return. But again, your conviction keeps you from selling, as you anticipate that the bull market will push the prices even higher.
Another mistake
Fast forward to September 2024, and Cardano resides at approximately $0.34. After seven challenging years, your original investment is now in the red. In fact, Cardano ($ADA) has dropped from the sixth-largest cryptocurrency to the eleventh position. It’s been a tough journey, and you’re still awaiting that significant profit.
Why Bitcoin is the Key
So, what’s the takeaway from this saga? Altcoins , even those generating buzz like Cardano , can easily become financial traps if not approached wisely. Many investors mistakenly track their altcoins in USD, but here’s a reality check: this often leads to misleading conclusions. In the chaotic realm of crypto, the true measure of success lies in how your altcoins perform against Bitcoin .
When Bitcoin is thriving, most altcoins find it hard to keep up. Yet, there are instances where an altcoin might outperform Bitcoin —even during downturns—and that’s where the significant opportunities emerge. By concentrating on the pairs of altcoins versus $BTC, you can ultimately build up your Bitcoin holdings. This is a strategic advantage.
The Right Way to Track Altcoins
To maximize your investment capabilities, shift your focus from merely tracking altcoins in USD. Instead, pay attention to their performance relative to Bitcoin ($BTC). A clear sign that it’s beneficial to hold or purchase more of an altcoin occurs when it slightly surpasses Bitcoin ($BTC). Conversely, if it starts to lag behind $BTC, it may be prudent to cut your losses and exit swiftly.
Your chances of achieving maximum gains improve significantly when you measure altcoins in relation to Bitcoin ($BTC). This strategy emphasizes building your Bitcoin stack rather than just trying to increase your USD balance.
Source: https://beincrypto.com/altcoin-markets-strengthen-crypto-bull-cycles/
Timing the Altcoin Market
To really capitalize on altcoin investments, understanding when an altcoin has hit its lowest point in the cycle is crucial. I’ve, therefore, created a unique Cycle Indicator based on Stochastic RSI, which notifies you when an altcoin is likely to outperform Bitcoin .
Example: KAS/BTC Strategy
Let’s examine how this strategy plays out in real scenarios. Take a look at the KAS/BTC pair analyzed daily. On January 18 and April 19, 2024, my Cycle Indicator indicated light green signals, highlighting critical reversal points within the KASPA pairing. Following these signals led to impressive gains of 40% and 70% against Bitcoin , translating to over 60% gains in USD during the same periods. These are the exciting opportunities I share with my subscribers.
$KAS surged 40% against BTC in January 2024, $KAS saw a 65.5% rise against USD in January 2024, $KAS climbed 70% versus BTC in April 2024, and $KAS increased 60.8% against USD in April 2024.
By adopting this method, you can cut through the clutter and make well-informed choices regarding when to buy, sell, or hold an altcoin . It’s all about identifying reversal points in altcoin/BTC charts rather than fixating solely on altcoin/USD fluctuations.
The cryptocurrency landscape can feel like a thrilling rollercoaster ride, and altcoins present some of the wildest excursions within that thrilling park. However, by tracking your altcoin/BTC movements, you can convert that volatility into lucrative chances. Avoid the pitfall of only focusing on USD valuations—concentrate on what truly matters: your Bitcoin portfolio.
Disclaimer
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