Bitcoin looks to be forming a legitimate surge this week with a strong bull flag forming and with BTC being up almost 18% over the last week. Naturally, this is good news for crypto fans, but why is it causing altcoins to fall at the same time? Well, to get us started for the newbies playing the Bitcoin surge for their first time, this is pretty much standard operating procedure. The adage “Bitcoin Rises, Alts Fall. Bitcoin Falls, Alts Fall” is and most likely will be true until a real uncoupling happens from BTC — but alas, that still could be a far-off future.
This trend tends to happen for a number of good reasons that should calm your altcoin fears after hearing them. Firstly, we have one that’s rather easy to see: an incredibly large chunk of the volume happening for altcoin trades is often done in Bitcoin, to begin with, and many shrewd traders are extremely conservative with their alts during Bitcoin runs as it often becomes more valuable to hold onto your BTC overnight than to attempt to find gains in alts. This often pushes our day trading volume down by several pegs and is likely to cause a dip in many alts as people liquidate in attempt to hold and increase the value of their BTC position so that they can diversify into an even larger number of alts at the end of a run.
It’s not uncommon to see a massive altcoin run following a large BTC surge, so long as BTC doesn’t proceed to simply fall off a cliff immediately afterward. With this in mind, it’s prudent to look broader than the surging Bitcoin and instead set your sights on the projects that are actually seemingly doing nothing, as any coin that maintains or simply loses a small percentage during a BTC run is likely to see an even larger run than the BTC push that preceded it. Using this knowledge combined with the often double value we get in our alts increasing in value, both relative to fiat and BTC, is how many traders have made their living, and for some retirement.
While many take the safe route during these runs, I think it’s important to ask yourself if you’re doing so out of your belief in the value of Bitcoin and the lack of faith in your altcoins, or simply over the fear of losing money. If it’s the former, then that’s absolutely the right call to make, especially if you’re a day trader skating by on razor thin margins. Yet if you fall into the latter camp, this is simply a good time to heavily evaluate your projects and to define if you truly believe in the project for a long-term hold or if this a good time to exit a coin that you’re only holding in the hope of small gains. If you’re looking for some solid picks and advice on what to pick up, I can’t recommend our reports enough. As always, though, look deep and go for the long holds. And as anyone who adopted any top-ten project at inception can tell you, they went through some serious hurdles along the way, but every time they sold, they regretted it. Getting caught holding a bag is an awful feeling, but not nearly as bad as watching a project you liked and sold too soon soar far above you until your stomach drops.