Crypto Altcoins Are Rekt – Here’s Why

Crypto Altcoins Are Rekt – Here’s Why

so you want to make a big profit in the crypto Market of course you do who doesn’t right but you need to be ready for insane stomach churning volatility but don’t be afraid because it’s actually a feature of the crypto Market not a bug a feature okay but where do you start you turn to bitcoin you certainly could if you’re playing with a big enough stack to start with but for a lot of people it’s logical to move out along the altcoin risk curve where returns can be higher and profits can and then be plowed back into BTC for long-term wealth storage as a strategy it makes sense sounds easy right but you have to be willing to stomach the risks and the sometimes intense ups and intense Downs oh everybody loves volatility when it’s upside volatility not so much when it’s downside because altcoin trading is pretty damn nuts and if you’re doing the altcoin jungle game then it’s a good idea to understand exactly why altcoins are so damn volatile in the first place because if you know why your bags are doing what they’re doing it actually becomes a little bit easier to stay calm when things get a bit crazy in the market and to buy and sell at the right times or just hold through the turbulence if that’s your plan too but before we go through why altcoins are volatile let’s just recap a little bit why we should learn to love volatility volatility is your friend whether you want to believe it or not it’s true in fact you should actively seek it out volatility is great just imagine a a completely Stable Market where there’s no stress everyone knows exactly how much everything is worth and we all buy and sell at the exact precise correct value all the time sounds nice sounds relaxing and it’s the worst possible place to book profits now if you’ve already hit your lifetime wealth targets congratulations of course but and your goal is just now wealth preservation a super stable environment might actually work out just fine for you but if your goal is to grow your wealth as I assume the goal is for the majority of you watching this video then volatility is your friend and you should seek it out you want to buy as low as possible and sell as high as possible and volatility helps that happen and for the widest possible range you need big movements in the market AKA lots of volatility now after that absolutely probably want to park those profits somewhere more conservative high-risk altcoin money into lowrisk stuff to conserve your wealth but you need to make the gains first man and on that note we should really be glad to be trading when crypto is an option because there’s currently no other Market quite like it in the world no Market that’s quite so insane where the barriers to entry are so low with the barriers to deploy new tokens are so low the volatility is so high meaning 10x or even 100x or higher returns frequently occur to people like you and where there is a constant conveyor belt of just new tokens coming by protocol vying for your attention so while there are very very big risks and you can lose all your money like that never forget that okay but that volatility is important and yeah it goes both ways it goes up it goes down but that volatility is the reason that we’re here it’s what provides the big gains in the market let me just remind you that if you want to keep on top of everything happening in the crypto space to find those volatile opportunities my team and I published the best Weekly Newsletter in the business it’s called wealth Mastery and it is packed with all of the latest on altcoins memecoins Bitcoin defi nft charts and much more we are working hard to help you stay ahead of the curve of the market our readers love it I know you will too you can join 125,000 plus weekly readers for free using the link in the description or the pin comment over onx now back to altcoin volatility conversation the first key factor making altcoin so volatile let’s discuss altcoin novelty you see if you’re immersed in crypto land as I am and I suspect many of you will be then you know bitcoin’s the granddaddy the Boomer coin such a new technology feels funny to say it but it’s true for crypto the place where all roads lead is back to bitcoin eventually BTC to you is definitely not novel or in any way crazy but remember that it’s only really this cycle with firms like Black Rock launching Bitcoin ETFs that a majority of Normie investors especially institutional ones are really starting finally to view BTC as legitimate asset so from that traditional perspective if BTC still seems kind of Novel to the Normy investor than altcoins are truly exotic crazy okay a whole heap of unknowns are attached questionable reputations are attached uncertainty around what they actually do how does this make money what is the token model look bitcoin’s just easy man just it’s digital gold there you go you understood it all investors immediately have a starting point to assess it from because it’s an easy concept to get but how many altcoins come with a two-word easily digestible summary like that none maybe dog coins dog coin done anyway the more novel a token is the more difficult it might be to package it up into assess it and there’s some really crazy exotic stuff out there and that puts alts at the extreme end of risk on assets the kind that can move up sharply in a bull market and dump instantaneously dramatically viciously savagely when sentiment swings you’ll see your alt coins go down by 99% low market caps low liquidity all that kind of stuff other key issues you know really important to keep in mind for example Bitcoin has a market cap of around $1.4 trillion the time recording well by comparison chain link has a market cap of around 10.5 billion very important technology love my chain link bags by the way from receive full portfolio disclosures Link in the description pin comom and and X further down the rankings though and that chain link is a big coin in the market it’s a top 20 coin further down we have stuff like leading AI coin bit tensor which is still in the top 50 it has a market cap around $2.8 billion it’s a baby a baby okay remember all crypto combined is worth less than Nvidia stocks anyway that means for bit tensor for example would take a lot less money coming in to move the bit the bit tensor price and as we move even further along the altcoin curve the market cap gets smaller and smaller and smaller at the really low end we have Nano cap meme coins and other tokens with market caps in singled digit millions and even less than a million sometimes and you can imagine that in these cases even just one big buyer or a small group of buyers jumping in at the same time can easily shift the price by multiple X’s you’ll see tokens go hundreds or thousands of percent almost overnight sometimes this is where you get those crazy moves 10,000 x happens it’s crazy but it’s true a great example of course right now Salon meme coin seen crazy things we had like the book of meme ran up earlier this year from literally nothing to market cap of a billion dollars in like 3 days that’s Insanity now book of me could do that because of course is launched by Niche but well-respected nft artist who also had a trusting community on his side so all that obviously worked in his favor and it still has a market cap of just under a billion dollars so it actually kind of maintained its success which is pretty impressive for any meme coin where was thousands of meme coins launching a day but it’s at this end of the market that you also get pump and dumps rug poles major price manipulation and every kind of finance and gambling related degeneracy that you can possibly imag imagine it gets real dark real fast also at these kinds of market caps if a whale offloads a large bag after the price Rockets up guess what they’re going to Nuke the chart they need liquidity and that’s you watch out because at these levels liquidity to sell it just just simply doesn’t exist it’s not there that all said though there are absolutely solid projects emerging all the time from Nano caps and low caps things with one5 1020 million market caps including memes of course that go on to stick around and make a big impact dog with hat great example they put the dog on The Hat Man bleeding edge technology it had a sub hundred million doll market cap at the start of the year now it’s worth $3.5 billion that’s a great example of something that goes on to make it but needle and Hast that kind of stuff okay new AI coins like Palm inspectre also look like they may have more to come this cycle not Financial advice just sharing some examples okay but something you’ll notice is that coins that do well rely on a word we hear all the time in crypto narrative so stick around let’s figure out exactly how narrative affects volatility look crypto narratives they are the stories that are being told to make people want to actually throw their hard-earned money into these shall we call them assets assets yeah this applies even a Bitcoin at the top of the chain which has the best narrative digital gold The Narrative might be ETF approval might be ETF institu buying those ETFs people millionaires billionaires storing their wealth inflation hedge all that kind of stuff it’s all narratives around Bitcoin sometimes these narratives are for real the ETFs did really get approved institutions are actually buying Bitcoin sometimes especially when it comes to altcoins though the stories become less solid and more prone to evaporate AKA a lot more but people can buy that narrative for the short short term and all of course that means volatility when a narrative is hot the market believes in it even if it doesn’t make sense like metaverse in 2021 metaverse is going to take out years and years to build Market priced it in as if it was coming tomorrow when everyone believes in it or collectively pretends to believe in it prices can soar very fast and these assets just go crazy but just as quickly there might then be the realization that actual development is a long way off or a long shot to actually work great idea probably not going to work or hey great idea it’s going to take 5 or 10 years or attention simply dissipates naturally because lots of stuff happening in the market every day Focus moves elsewhere new narrative emerges New Meme coins come out whatever it might be in the last cycle of course we had strong narratives around ethereum Killers for example all those alternative layer ones that would supposedly go on to outperform ethereum take away all its market share ethereum is the old dog new dogs going to come in and kill it etc etc etc again we had the metaverse narrative which was really really bolstered like Facebook and stuff like like that became a much more macro narrative for the stock market and stuff as well Zuckerberg even changed his company’s name to meta it was that serious that serious right metaverse still very exciting still going to be cool but it’s going to take a while in this cycle of course we have narratives around artificial intelligence real world assets decentralized physical infrastructure networks the mem coin super cycle mem coins are the big Narrative of this cycle by the way it’s not exactly clear what a mem coin super cycle actually is it probably isn’t a real thing at all it’s just some phrase that people make up to get you excited about buying me coins but the phrase itself feeds into the idea that Meme coins are going up this is the time and people love mem coins right now now just to reemphasize though narratives can be based in reality or they can be made up of absolute but either way altcoins are especially affected by those narratives and the ability of people to convey those narratives and believe those narratives the bigger the volatility and response to a matching narrative the bigger the price moves and from there let’s look at a similarity between the stock market and the crypto markets so let’s talk about beta to BTC so that’s borrowing some terminology from the stock market here so we can make the general observation that altcoins basically have a high beta value in relation to bitcoin as The Benchmark So In traditional finance a high beta stock like a tech stock for example of course they’re very much correlated to the broader Market moves moving up and down risk on risk off attitudes all that kind of stuff but they move more violently so the S&P 500 might be the Benchmark and those beta plays tech stocks in this example they move much faster up and much faster down they’re high beta low beta stocks are things like utilities boring boring stocks and they’re correlated but less volatile than the Benchmark the S&P 500 for example now in crypto it’s Bitcoin that’s the Benchmark altcoins that have high beta you will really see this play out because they feed on rather than generate bullish sentiment that’s really important to understand they feed on rather than generate Bitcoin can set the market off with wild bullishness that’s where the liquidity and flows start that said though this isn’t a nailed on relationship all the time especially when there are more new tokens being created than ever before meme coins for example have their own sort of Trends but essentially you need to be more picky now than ever before trying to find the good quality altcoins react most strongly to bullishness and a great example of this cycle of course would be Solana but that brings us to another point which is that not all altcoins are the same so how can you differentiate how can you find the good ones let’s talk about categories of altcoin the word altcoin is pretty damn broad so it basically makes sense to split up into subcategories and to start how about eth is that even an altcoin anymore well Bitcoin Max also say of course it’s an altcoin it’s the ultimate shitcoin a lot of other people people say no it’s too big to be classed as an altcoin it’s its own asset class now there are even spot ethereum ETFs coming so of course it’s its own asset class it’s not an altcoin anymore so let’s just say that if it’s an altcoin then it’s in its own category at least it isn’t especially volatile let’s say that anyway after eth we have the major alternative layer ones which make up a lot of the top 20 things like salana playing a huge role this cycle coins like Avalanche cardano all that kind of stuff usually in around the top 10 top 15 we’ve got newcomers like ton chain absolutely surging and there are many many others dozens hundreds probably among these are the kinds of coins that are very very volatile but on extended cycle long time scales similar position there’s also the eth layer 2 scene that’s going on with networks like arbitrum and base but we also now have exhaustingly to say layer 3es built on top of layer 2os orbit chains and arbitrum a chain called dgen on top of Base I mean it’s all so tiresome isn’t it then you’ve got utility projects so there’s things like oracles AI coins real world asset coins decentralized exchange tokens gaming tokens which can vary a lot in market cap and a lot in utility and many of them have extreme swings on short time scales and after that at the very most volatile on the most risk-laden end of the scale of course we have a tsunami of Untold proportions of New Meme coins being launched all the time although don’t forget that a few memes can potentially go on to establish themselves as really long-term assets Dogecoin for example first mem coin the OG meme coin launched way back in 2013 it is now a definitive piece of furniture in cryptool it’s part of the landscape it’s not going anywhere it is the OG mcoin that made it finally though what about Bitcoin by which I mean what makes Bitcoin different and what can it teach us Al about altcoin volatility what it comes down to is a list of characteristics Bitcoin was the first that makes a difference same reason that ethereum support is the first major smart contract platform bitcoin’s been working perfectly as designed for a decade and a half it wasn’t pre-mined it has two possible utilities store value medium of exchange both very simple both easy to understand its market cap has grown into the trillions and it’s going to go on to add many many more trillions to it it’s listed on every major centralized crypto exchange where there’s plenty of liquidity for it and what’s more of course is now being accepted as a major traditional Finance asset with ETF listings proliferating around the world so it can be accessed as part of a regular stock portfolio now through these spot ETF products and so actually that list of what makes Bitcoin different on also gives you a pretty clear idea of how much of a roller coaster any given altcoin might actually be low liquidity not listed on many exchanges all kinds of crap like that massive insiders Bitcoin checks all of the good boxes so the further from those same boxes a new coin is the more volatility you can probably expect I hope that helps explain why altcoins are so volatile and also why that volatility is actually a big POS positive for you if you can play it right thanks for watching

Why altcoins are volatile, and why that’s great for crypto traders.
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00:00 Understanding Altcoins
01:11 Why Volatility Is Good
03:50 Altcoin Novelty
05:29 Low Market Caps and Liquidity
08:33 Crypto Narratives
11:30 Beta to BTC
13:13 Categories of Altcoin
15:32 Why Is Bitcoin Different?

#bitcoin #crypto #investing #cryptocurrency #cryptocurrencies #altcoins #cryptobullrun #ethereum

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Disclaimer
Everything expressed here is my opinion and not official investment advice – please do your own research before risking your own money. Lark Davis (The Crypto Lark and affiliated brand Wealth Mastery) is not providing you individually tailored investment advice. Nor is Lark Davis registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Lark Davis is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.