Welcome to part five from our series of articles designed to help you understand the flow of money through different types of crypto assets. In this series of articles, we have looked at historical trends that appear to be driving a predictable sequence of investor behaviors in the wake of a Bitcoin price rally. Read on if you are new to the series or skip to How to prepare for the alternate season if you have followed the series.
Part One In this series we look at why Bitcoin tends to be the first to move, its power to attract new crypto investors to the fold, and how that triggered the flow of money that we discuss in this series.
Second looked at why Ethereum tends to be next to move. We explained that this is mainly due to its size (Ethereum is the second largest crypto asset by market capitalization) and because it supports an entire ecosystem of applications and services.
The pieces Cuban Tres Guitar y four He looked at how, in 2021, we saw several large-cap altcoins keep up with Ethereum rather than rally after Ethereum's price surge, as they have in the past. This can be primarily attributed to the fact that the large-cap altcoin space is now a larger and more diverse industry, including several real competitors vying for Etheruem's throne as the king of smart contracts.
Now, in the span of 2 weeks, we have seen Ethereum, Solana and Polkadot break all-time highs and explore previously unknown price ranges. Large-cap altcoins that move together in this way are seen as a good sign that the next phase of the cryptocurrency price cycle may be upon us. This phase is called alternate season.
Given that an alt season is characterized by multiple altcoins experiencing rapid upward price movements simultaneously, how can the average crypto investor ensure that their wallet can benefit from it? We will take a look.
How to prepare for the alternate season
Alt Season is the crypto term for a period when altcoins outperform Bitcoin, presenting a much broader range of investment opportunities than a targeted Bitcoin rally. For many, a winning strategy is simply to bet on the blockchain technology that they believe has the most potential. Making this decision requires a substantial amount of research and a deep understanding that extends beyond Bitcoin and Ethereum.
If only there was a way to take advantage of the alt season without having to lock yourself away for weeks to research a growing list of disruptive blockchain technologies.
Well, the good news is that there is.
It's called diversification, and in this article we'll see why it's not just a word used by Wall Street bankers.
What does the alternate season announce?
New crypto investors tend to buy Bitcoin because it is the least volatile and best known crypto asset on the market. For many, transferring money from Bitcoin to more volatile altcoins is scary. Therefore, it is important to take into account objective and verifiable data when deciding whether or not an alternate season really goes.
The chart below shows us the total crypto market capitalization, or the total value of all crypto assets, excluding Bitcoin. In other words, the line shows the value of all the altcoins combined over time.
At first glance, it is clear that this chart follows some kind of repeating pattern. We can see striking similarities between the two prominent periods, namely 2014-2018 and 2018-present.
The 2014-2018 period shows an accumulation phase (red line), followed by an alternative season (price increase in 2017). We can see from the graph above that a similar accumulation phase has occurred during the 2018-2021 period. Furthermore, we are currently in the same stage of the cryptocurrency price cycle that we were at at the beginning of the 2017 alt season.
If the model continues to follow the shape established in 2014-18, that could mean this is just the beginning of another alternate season.
Why is it difficult to choose a winner
In just 4 months, Solana's price has risen 574%, while its rival Cardano has only risen 52%. While investors who bought Solana before its epic price rally are undoubtedly delighted with its returns, invariably they should have bought without any real certainty that Solana would decisively outperform a close competitor like Cardano.
In each alt season, a small number of altcoins have set price growth records, while others see more moderate gains. The point is, even for seasoned analysts and market researchers, predicting which altcoin will outperform all others involves an element of luck.
Additionally, if a new crypto asset succeeds in meeting the criteria that Revix packages are based on, Revix will automatically reweight the package, keeping its portfolio current with the rapidly evolving world of cryptocurrencies.
The table above shows the top 10 crypto assets by market capitalization from 2015 to present. Crypto assets highlighted in blue represent newcomers to the Top10 compared to the previous year. It's remarkable how much this list has changed from year to year. This table clearly shows how difficult it is to accurately predict which crypto asset will be successful or which will become a fleeting currency.
So how do you choose the winners? We don't have to.
Diversification is easier than you think
In the world of crypto assets, diversifying simply means investing in several different crypto assets. By doing this, you are spreading your risk across multiple investments with exposure to multiple sectors rather than putting everything you have in a single crypto asset.
The idea is that by exposing your portfolio to multiple crypto assets, you will benefit from uncorrelated returns.
Of course, you won't get the same returns as if you did your best for the best performing crypto asset, but on the other hand, you won't risk having all your eggs in one basket. Instead, through diversification, you spread risk and enjoy a much less volatile journey down the road.
Building a diverse crypto portfolio always requires investors to conduct their own in-depth research, decide which crypto assets are best for maintaining exposure to certain market sectors, and constantly replenish their portfolio to stay in tune with the fast-paced nature of the market. cryptography. Clearly, it is neither a simple task nor a time efficient task.
Revix, a Cape Town-based crypto investment platform, was founded to solve this problem. In addition to facilitating and securing the purchase of individual crypto assets, Revix's fame lies in its Crypto Bundle offerings.
In the same way that you would buy from the JSE Top40, the Revix packages allow you to invest in a group of cryptocurrencies without hassle.
Revix's allows users to invest in 3 different theme packages:
The Top 10 package is like the JSE Top 40 or S&P 500 for cryptocurrencies and offers the same weight exposure to the top 10 cryptocurrencies that account for over 75% of the crypto market. This package includes all the cryptocurrencies mentioned in this article and has significantly outperformed Bitcoin in the last 12 months.
The smart contract package provides equally weighted exposure to the top 5 smart contract-centric cryptocurrencies like Ethereum, Solana, and Polkadot, which allow developers to build applications on top of their blockchains, just like they do. Apple creates applications in addition to its operations. system.
The payments package offers equally weighted exposure to the top 5 payment-driven cryptocurrencies that seek to make payments cheaper, faster, and more global. These cryptos include Bitcoin, Ripple, Stellar, and Litecoin.
Revix packages have outperformed a Bitcoin investment for only a period of one, three, and five years.
This graph shows the performance of Revix Packages During the past year.
Smart contract package (+ 821%), Top10 package (+ 712%) and payment package (+ 333%) outperformed Bitcoin (+ 317%) over the past year without the investor having to research or depend on guesswork.
And it's even better!
Revix Packages They are based on a direct index model, which means that, unlike an ETF, Revix buys and holds the underlying assets in their other half. It was also the first crypto platform in South Africa to register and pass a third party audit of these assets, conducted by Mazars.
So not only do you get diverse exposure to the alternate season with a single click, but you also get the assurance that an audited company is taking care of your assets.
Revix: no purchase fees on Revix packages
Between November 12 and November 18, you will pay zero fees When you buy that Top 10, Smart contract package or the Payment package with ZAR or GBP.
revix is backed by JSE-listed Sabvest, offering access to all cryptocurrencies and individual packages mentioned in this article.
For more information, visit www.revix.com.