My ALTS are Bleeding!
Did Elon Tweet that he Hates Alts?
There are no nefarious tweets from Elon Musk that I am aware of but yes indeed the Alts are taking a hit. Why?
Well, the name of the game is Dominance and Buy Pressure. There is another article that dives a little deeper into these issues located on our blog. You can read it HERE.
If you are in the Daily Dose then you have likely read the Week In Review where we discussed Dominance and Volume. You can read that HERE.
For everyone else who has not read up on Dominance – let me walk you through it real quick.
Dominance for Dummies
Picture yourself a brand new Investor into Crypto. Your friends and family have been telling you for years to get into Crypto and finally you decide to take the plunge. You have amassed a small savings of $10,000 to get started. Now…What do you buy?
With over 10,000 projects and no real knowledge in the space you naturally gravitate towards the Top 10 Coins. Of the Top 10 Coins by Market Cap – only 8 of them are actual projects with the other two being stable coins.
As you navigate down the list, you recall some of the names:
So, like any other responsible investor, you decide to “Diversify” your portfolio. However, you know you want Bitcoin because that is what all the rave is about. You decide that you will split your portfolio 70/10/10/10. What this means is that you will put 70% into Bitcoin and 10% into three Alts each.
BTC = $7000
ETH = $1000
XRP = $1000
DOGE = $1000
In this split, we can say that Bitcoin has a 70% Dominance over your portfolio.
But I'm Just One Guy
Brother, you are ANYTHING but ALONE.
From April to June, Coinbase added 12 Million new Users. To put that into perspective – Coinbase only represents about 11% of those invested in Crypto.
Now, you and 12 Million people all come into Crypto with Fresh Cash and you decide that you want more Bitcoin than anything else!
Surely, Bitcoin will have more Buy Pressure than it did before if all new people come into the market and Buy more Bitcoin than anything else.
This creates a Domino Effect for other Investors and Traders.
What Happens Next?
Investors and Traders will see the increase in Buy Pressure on Bitcoin. They will see that Volume has increased and therefore they add Bitcoin back to their radar for everyday trading and investing.
Once they see a trade or a level that they want to buy at, they too BUY Bitcoin. The KEY DIFFERENCE here is that they SOLD and Altcoin in order to free up capital so that they could Buy Bitcoin.
See where this is going?
Multiply this logic by hundreds of millions of users all over the world and it should be easier to see Why the Alts are Bleeding while Bitcoin is looking to pump.