While many altcoins present intriguing features, promising advancements, and lucrative investment opportunities, a recent analysis by K33 Research has demonstrated that a ‘Bitcoin only’ investment strategy outperforms altcoin portfolios over the long term. Historical data reveals that besides a few occasions since 2015 when altcoins outpaced Bitcoin, the flagship cryptocurrency has emerged as a more reliable investment.
Bitcoin has experienced three consecutive bull and bear market cycles beginning in 2013, with the latest in 2021. During these cycles, Bitcoin’s price rose parabolically in a short period. However, apart from a few instances, such as the altcoin season of 2017, when Ethereum’s ICO boom and retail investment hype around Ripple’s XRP saw altcoins surpass Bitcoin’s performance, or in 2021, when the surge in Dogecoin and Shiba Inu briefly brought altcoin portfolios closer to Bitcoin’s value, Bitcoin has generally outperformed altcoins.
The analysis calculated the performance of $1 investments in 1,009 altcoins since 2015 versus the same amount invested in Bitcoin. The altcoin portfolio would be worth around $7,000 today compared to $50,000 from a Bitcoin-only strategy. Furthermore, K33 Research found that over two-thirds of the 1,009 altcoin projects that entered the top 100 ranks by market capitalization have become inactive.
Altcoins are typically narrative-driven and face a myriad of challenges, including regulatory scrutiny, which has affected privacy-based tokens. Additionally, many DeFi tokens, like Compound and Thorchain, have dropped out of the top cryptocurrency list due to decreased DeFi usage and the changing demand for non-yielding governance tokens. Altcoins are also subjected to greater volatility and unpredictable shifts as a result of regulatory uncertainty.
Given Bitcoin’s superior long-term performance over altcoins, dollar-cost averaging (DCA) into Bitcoin might be a more effective investment strategy for crypto investors. DCA involves consistently investing a fixed amount of money into an asset over a given period, regardless of the investment’s price, in order to average the invested amount and remove the need to time market movements.
Source: Cointelegraph
