What is the way out of the short-lived bear market? Is it swing trading or HODLing? Although different parties have different answers, everyone can agree that altcoin’s market cap goes south every time the price of bitcoin falls.
This is partly due to the correlation between assets and partly due to the fact that altcoins are alternatives to digital gold, and from time to time institutions prefer the digital gold narrative to altcoins. In fact, Willy Woo drew the map of the entire cryptocurrency market against the value of BTC, pointing out the downward trend in the trail. According to Woo, this downtrend means an exponential loss.
Based on the chart, Woo concluded that swinging trade altcoins rather than HODL is ideal, as Bitcoin is the only asset that is worth HODL over a long period of time.
Woo also classified altcoins as oscillators and degenerators in his previous tweets, this classification suggesting that retailers can divide assets in their portfolio based on when and how to trade against Bitcoin while making a profit. While some might argue that HODLing a capital-weighted index of a basket of altcoins would bring returns similar to Bitcoin’s based on the dynamics, Woo’s chart seemed to suggest otherwise.
The recent sell-off, sparked by the decline in Bitcoin double spending, suggests that several swing traders may have recorded unrealized gains on altcoins such as MANA, BAT, AAVE and DOT.
In the long term, however, the HODLing of altcoins has also proven to be loss-making for many. Additionally, tokens like XRP, ZEC and XMR have not made a comeback to pre-2018 levels despite Bitcoin’s ongoing price rally and the recent investment flow in altcoins. As the flow of investment shifts to altcoins, the swings are expected to become increasingly volatile, leading to relatively high profits – double-digit profits spread out over a market cycle when Bitcoin’s price rally goes sideways.
However, Raoul Pal is one of many who are not so sure. In a recent tweet, Raoul Pal asked Crypto Twitter to share her favorite altcoins with him as he wanted to add 10 new altcoins to his Bitcoin and Ethereum bets on the current dip.
Attention! : I will add a basket of 10 alts to my BTC and ETH bets with this dip. Shake your coin for me but with a high quality heel WHY should I look at it? My knowledge base is low so treat me like the idiot I am (nice)
Maxi aggressive “Shitcoin” postings = Insta-Block
– Raoul Pal (@RaoulGMI) January 21, 2021
Bitcoin maximalists would agree with Woo, however, as there are altcoin traders who book profits by swing trading with risk-adjusted returns steadily approaching Bitcoin. Only time will tell what turn the old season will take, especially as Bitcoin climbs back towards $ 41,000.