When Bitcoin sneezes, the altcoins catch the flu. As $BTC continues to struggle at the $66,000 support level, some of the altcoins are getting absolutely hammered. Should you be selling, or is there light at the end of the tunnel?
A red swathe of losses
The week has not begun well for Bitcoin. The weekly stochastic RSI (momentum indicator) crossed back down just when it looked like it was heralding the recommencement of the bull market. This certainly puts a damper on upward momentum, and perhaps it could take a while to cross back up.
When Bitcoin struggles the altcoins are generally in a much worse state, and this is the case on Monday as a red swathe of losses cuts across the altcoins.
Render ($RNDR) and Injective Protocol ($INJ) have given up their recent gains; both down 8.6% and 9.4% respectively. The AI niche is faring much worse. $FET, $AGIX, and $OCEAN are all down around 15% so far today.
At time of writing, volatility is really high and prices are moving so fast that its difficult to put a price on many coins and tokens. The least hard hit cryptocurrencies are Bitcoin itself (-1.50%), and Ethereum (-3.45%).
What can investors do at this point?
Firstly, all investors are responsible for all their investments, and what anyone else says has to be taken with a healthy pinch of salt. However, in times such as these there are options. If certain altcoins have been invested into, their prices will probably need time to mature.
Times like these do give the investor the opportunity to reconsider all the altcoins in their portfolio. It might be that the number of altcoins that have been purchased has become quite large.
One thing to consider is whether all those altcoins are outperforming $BTC over this bull market (very few have done so). If an altcoin isn’t outperforming $BTC then the question has to be posed as to why is it still being held? Yes, with the right fundamentals for your altcoin things could change, but underperformance is resulting in lost opportunity cost.
A possible strategy could be to sell the underperforming altcoins and then move that value into the fastest horses in your portfolio. Yes, you are possibly going to take some losses from the sale, but at least your portfolio would be leaner and you would have more value in your better performing altcoins.
Another strategy is to just sit tight. Markets can’t keep going down forever. There will be a bounce at some point, and you could even sell those altcoins you are less keen on when they return to confirm the breakdown level.
Risk management is key
At the end of the day, the main lesson to be learned is that it’s all about risk management. This would hopefully be optimised from now on, and stop losses should be set in order to minimise any future losses.
Trading is a very hard game to play. Emotions can wreak havoc among investors who are perhaps new to the game, and there are a lot of shiny cryptos that are being touted as the next best thing by all kinds of influencers and celebrities. Only around 5% of traders make a living from the market, so to be among that 5% a huge amount of learning needs to take place. Make sure you invest the time as well as the money.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
