What to expect from bitcoin (BTC) and altcoins?
With the bull market just around the corner, investors must decide whether to rely on the stability of bitcoin (BTC) or go exploring altcoins.
Is it worth investing in BTC, which many consider digital gold, or in altcoins that offer returns of hundreds and sometimes thousands of percent?
Opportunity cost becomes important when investors compare returns on alternative investments. Because time and capital are limited resources, they must quickly find trade-offs that will optimize their portfolio. Understanding that choosing one asset is inextricably linked to rejecting another is a fundamental aspect of investment decision-making.
What about the risk?
The cryptocurrency market, known for its high volatility, requires careful risk assessment. Bitcoin can be attractive to new investors in difficult markets due to its stability. Altcoins falling in a bear market can offer significant profit opportunities, but also have higher volatility and therefore greater risk. A good understanding of risk tolerance will help the investor make a decision.
What does the altcoin market offer?
The diverse altcoin market favors rapid growth, and those who study it thoroughly should find coins with the potential for higher short-term profits that fit their strategy. For those whose investment strategy is diversification, it is better to opt for a more conservative strategy: their assets should be dominated by BTC, although the exact allocation between bitcoin and altcoins depends on their risk tolerance and chosen strategy. Since the beginning, BTC has risen in value by more than 100%, significantly outperforming the other coins in the top 10. However, some altcoins are showing explosive growth trends, as evidenced by their crossing of the 50-week simple moving average (SMA) barrier. This bullish momentum can be seen as a good omen not only for them, but also for other cryptocurrencies.
Investment strategy
Investment strategy
Decision making should be guided by a well-defined investment strategy. Investors should define their time frame, goals, and contingencies to deal with the complexities of the cryptocurrency market. Those seeking long-term asset preservation and hedging against inflation may want to invest in bitcoin. Those looking for short-term gains and a diversified portfolio may want to add a few altcoins to the main cryptocurrency. Those who are willing to follow the market and stay up-to-date may want to allocate more capital to altcoins.