A glimpse at the altcoin market
Been a while....
Wanted to share my view on the current state of the markets.
Keep in mind this is NOT financial advice nor any kind of recomandation, simply my personal opinion.
So let's get to it,,,
I'll start off with the good old saying "buy low sell high".
Easy to say, hard to do,,,, or is it? Lets take a look at a few charts.
STEEM chart is in log metrics so the whole chart can be visible
So what I did here is I messured the whole chart and put a middle line, as you can see from the examples (and most of the market has very similar charts aka very low prices compared to btc) they are all far bellow it.
I expect some "but u took the All Time High as messure on chance anyting goes back up there" comments, so well I then did the same for a Local High that is already bellow the 50% line of the whole chart and again market the 50% compared to that and the result is still the same, prices at the moment are still far bellow even if we look at the "small scale".
The upside on what would be 50% of the smaller scale varies but from those 3 examples given we can see that it is atleast 120% gain (on ltc) up to nearly 1500% (STEEM).
Thankfully in crypto most of the coins are traded against BTC which has a limited ammount ever to be produced (21m), which then results in altcoins fighting for their % against Bitcoin which results in massive volatility and price fluctuation.
Most of the altcoins have a tendency to reach certain highs and fall in price sometimes even more then 90%.
The imense demise of prices allows for a effective accumulation by the "whales", let me show an example (i will chose a different coin for this example so that you get a feeling of how the market looks like in general):
for the ease of the example lets say that the position size on the first entry was 1 BTC;
entry @ 0.00005669 satoshi with 1 BTC= 17639 VTC
exit @0.00060843 satoshi with 17639 VTC= 10.73209677 BTC
that was a 9.73 BTC profit in the last cycle
now in the next entry @ 0.00003000 satoshi it would take 0.52917 BTC to rebuy the same ammount (17639) of VTC.
with the original 1 BTC buy in one would nearly double his exposure in VTC compared to the last cycle, and if one would take 1 BTC out of the 9.73 btc profit form the previous cycle the exposure would be nearly 4x, while still retaining 8.73 BTC profit (made with initial 1 btc)
To put it in different words, if we were talking about "whales" cheap prices are an opportunety for them to buy allot of altcoins for a low ammount of BTC, in such situations the problem is buying not selling.
Now let's take this a step further, lets say one doesnt wanna wait for new All Time Highs nor even high's from the past cycle, but decides to settle for a 50% of the price he sold in the last cycle.
Well turns out that that would still be a 890% return (0.00027271BTC), let's pull the numbers from the example to make more sense:
- 0.52917 BTC @ 0.00003000 to rebuy the same ammount 17639 VTC = 4.81033169 BTC
- 1 BTC @ 0.00003000 to almost double the position for 33333 VTC = 9.09024243 BTC
- 2 BTC @ 0.00003000 by doubling the BTC position size for 66666 VTC = 18.18048486 BTC
Now that you've seen a cople of examples with some numbers it should make a bit more sense, but you all are probably asking yourself "OZ that's bs, if it were like that why have markets not gone up already, altcoins have been in the ranges of All Time Low prices for months now".
Well there is a simple answer to that, it takes time to accumulate on cheap levels.
What I mean by that is that there are no big sellorders where all the whales could bite on and fill their bags, the trades on low prices levels usualy range up to 0.1 BTC (depending on altcoin) because bigger ammount of BTC moves the price allot (a single Bitcoin buy can, depending on the altcoin, push the price up even more then 100% above the current market price). Not only that but big players have time, in other words they usually don't work 8 hour job like most of the smaller traders, they tend to take their time in the market to make the best out of it.
Now some further obvservations of mine on the market.
First of all, considering we are around All Time Low price levels on most altcoins, I have never seen so much BTC on the buyside of the orderbooks. You might think, but OZ VTC got delisted from poloniex and it only has 8 BTC on the buy side, it used to have 200,,,, well ye but it never had 8 BTC of buy support around the 3000 satoshi level. correct me if im wrong here but as far as my memory serves me it never did
Remark number two would be that most people consider altcoins dead, some becomming bitcoin maximalists, some thinking that only top 20 coins have any future and so on.
If you follow any crypto telegram groups or infact any other crypto media you will easily notice that most people in the space think altcoins will never recover, go to 0, go bankrupt or else.
All in all we are curently in phase of so called "capitulation" phase in many altcoins, where people lose faith and sell off their coins while the big players patiently wait and buy off their cheap coins, infact the lower the price the better for the given Altcoin's whales.
The third observation would be that the richlists of altcoins show that the top addresses have been mostly accumulating more and more of those coins, which would indicate that the whales still havent lost their faith, quite oposite, they are accumulating more.
Fourth and final observation is that people expect too much.
They are looking for an altcoin that will reach a certain price and stay there. Sadly thats rarely gonna be the case, one reason being cos altcoins are fighting to gain a % in the bitcoin market.
Imagine it as Bitcoin being the limit of how much other altcoins can gorw (no please don't start with all the "ETH flippening" things, even if it happens, ETH just takes the place of BTC and becomes the limit), and those altcoins are then taking turns on trying to capture a % of the market with each not abbandoned one getting a chance to "prove itself". After the attempt they sattle down in order to "recharge" for the next attempt.
So the next question that arrises is how to chose the altcoins that won't die off.
Well here I could shill you the coin's I personally like, or give you a cople theories, which I wont but I would like to sum this up to an important rule for an avrege investor in the crypto space:
There are THOUSANDS of altcoins out there and hands down one CAN NOT know if one or the other will survive and thrive, it's simply impossible, there is no quarantee and there are too many factors that play a role, bad code, exchange hacks, scams, developers abandoning projects, bankruptcies, bad marketing, etc etc, so in my opinion by far the best way in this space is to DIVERSIFY!
In crypto the price movements are so big that even if 9/10 of the altcoins in your portfolio litrly die off and dissapear you would most likely make it up with the 1/10 of the alts that survived and went up in price.
And to get some final thought's and views out of my head,,,
If you're a believer in the altcoin space, now you have the same chance (marketwise) as you had in early 2017, altcoins are at All Time Low prices, there's disbelief and paranoya in the space.
Quite honestly I think 90% of the coins will pump masively, not all at the same time, and then do what they did before, dump hard.
Kinda have a feeling that allot of ICO's gonna end up dead after the next cycle ends, thinking that they will eventually run out of money for operations, therefor im more in favor of real old cryptocurrencies without ICO as a long term investment.
That said I will leave you with a cople of more plain charts, with name not shown for no bias, so u understand more what I was talking about in this post.