The altcoins market has a myriad of different coins and tokens. The vast majority of these are complete junk, and are just there to part the unwary investor from their hard-earned money. That said, there are even top ranked altcoins by market cap that probably aren’t worth holding. Are you holding any of these?
You are responsible for your own investments
Firstly, when talking about investing in altcoins, it is 100% the job of the investor to make that final decision on what to buy. Government watchdog agencies might advise you to consult a financial advisor - but most of these are embedded in the traditional financial system and would probably have no clue on buying cryptocurrencies, and what’s more, would probably advise you to steer clear of the lot of them.
To be honest, this advice could probably save many would-be investors, particularly those attracted to those shiny tokens espoused by celebrity influencers.
However, it is clear that some incredibly innovative crypto projects are carving out new niches, and should the regulatory environment become fairer and more supportive of these innovations, the crypto sector would likely blossom.
Large market cap cryptos that don’t perform
Nevertheless, we are focussing here on crypto projects that many investors hold the coins/tokens of. The issue is that some of these projects are still in the top 20 cryptocurrencies ranked by market capitalization.
They have very well known names, and their communities are generally large and incredibly supportive and protective of them. However, the question needs to be asked: “Why?”
It may be that these particular cryptos do move up in price in the bull market. But they tend to sink a lot more than the best performing cryptos when the market is down, and they don’t keep up with those that regularly make the best gains when the market is in an uptrend.
Comparisons with Bitcoin
So what is the best way to detect whether you have one of these large market cap cryptos that just don’t perform? The best way is to simply compare its performance against the king of the cryptocurrencies, Bitcoin.
It could definitely be argued that if your cryptocurrency does not outperform Bitcoin over a decent period of time in a bull market, then what is the point of holding it?
Two of the crypto zombies
Source: TradingView
$XRP is ranked 8th in market capitalization for all cryptocurrencies with a value of $24.4 billion. Over the last 12 months it is down 6.5% against the dollar (and that in a bull market), and against $BTC it is down 97%. If this were a stock in traditional markets it would be termed a ‘zombie’ company.
Source: TradingView
Cardano ($ADA) portrays a similar picture. Down 93.4% against $BTC over the last year, this cryptocurrency looks extremely unlikely to get back to anywhere near its highs again.
Ok, so an investor that is wedded to either $XRP or $ADA might say that a partnership with a sovereign State, or with a giant corporation in the S&P 500 could come about, and then their holdings would go to the moon.
This could never be totally ruled out, at least not yet. But why would you hold on to this hopium when you could be holding Bitcoin instead, or one of the few cryptocurrencies that are outperforming the number one cryptocurrency?
The necessity of making at least 12% to 14% each year
Surely the idea of being in the crypto market is to make the 12% to 14% necessary each year to keep one’s head above water from the impact of fiat currency debasement and inflation, to say nothing of taxes and the rest of it.
No financial advice is given here. The writer is not a financial advisor, and has no qualifications to make any recommendations. He is purely stating the facts, and the reader has to make up their own minds as to which cryptocurrencies they buy and hold. It might just be gently asked once again: “Are you holding the right altcoins?”
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.