Which Altcoins Go Up When Bitcoin Goes Down?
As we all know, the cryptocurrency market is highly volatile and it’s not uncommon to see major dips in Bitcoin’s value almost every week. Even though altcoins tend to follow Bitcoin, when it is down, some investors look to diversify their capital within the crypto universe selling their Bitcoin to buy more stable assets. Diversification increases returns in the long run and pouring your capital into monetized smart contracts instead of leaving it in trendy Bitcoin form, seems to keep the investors with a more, stable positive attitude. This is when a horde of altcoins comes in.
What Happens When Bitcoin Loses Value?
The price of cryptocurrencies is related to the collective state of mind of the community. For example, Bitcoin's latest slump is believed to be linked to instability that inflation is creating in the US, which caused investors to remove what are considered "risky" assets from their portfolios. This tendency caused a massive sell-off of cryptocurrencies which, in turn, reduced the prices of digital currencies.
Anyway, volatility is completely normal in the digital asset market. Experts agree that the healthy approach when investing in cryptocurrencies is to make it a small part of your overall inversions, like 5% of the whole portfolio. This way, you reduce the risk of losing a big part of your capital and you can let the swings rise and fall without being constantly worried.
Why Do Ethereum Tokens Get Some of Bitcoin's Market?
There is a high correlation between what happens to Bitcoin and what happens to Ethereum tokens, but there are some distinct differences. The first and most obvious one is that Ethereum tokens can be used for more than just as a store of value.
Ethereum’s blockchain aims to function as the foundation for many different tokens other than Ether, enabling a channel to exchange valuable assets.
Which Were the Most Bought Tokens During the Last BTC Sell-Off?
Polygon (MATIC):
Polygon Blockchain-as-a-Service multichain platform that provides users with tools to develop infrastructure for Ethereum scaling. The native token of Polygon is MATIC, an ERC20 token that runs on Ethereum's blockchain.
Chainlink (LINK):
Chainlink is a decentralized oracle service for smart contracts that allows anyone to attach information from external resources into smart contracts. As more and more assets get digitized, the need for Chainlink’s services increases—and thus, so does its price.
Stablecoins:
Since these digital assets are tied to fiat currencies, like USD, when bitcoin falls, investors will sometimes flock to them because they are perceived as having more value relative to a volatile crypto asset. Some notable stablecoin options include Tether (USDT), TrueUSD (TUSD), and Dai (DAI).
To Sum Up
The most important tip to remember about crypto investing is to diversify. Throwing all your capital into one cryptocurrency means that if its value drops, so does your net worth. This is an especially risky strategy reserved for investors looking for short-term gains.
