According to a recent poll on Twitter, the majority of cryptocurrency traders have the predominant share of their portfolio stacked in altcoins rather than Bitcoin. Perhaps that’s somewhat understandable at the current period, as 2019’s altcoin season is seemingly blossoming. But how safe is that?
47% of Traders Hold More Than 60% in Altcoins
A recent poll on Twitter revealed that almost half of the participants invest the majority of their crypto portfolio in altcoins rather than Bitcoin.
How much of your portfolio is in altcoins?
— DonAlt (@CryptoDonAlt) April 9, 2019
As you can see in the results, 47 percent of traders have between 60% and 100% of their portfolio in altcoins. What is more interesting is that another 17 percent have between 40 percent and 60 percent in altcoins as well.
Twitter polls, of course, are not always a proper reference point. However, this one, in particular, has over 10,000 voters, which is definitely something to be reckoned with.
Perhaps it’s not surprising that people are allocating more of their resources to trade altcoins. As Cryptopotato reported, we’ve been going through this year’s altcoin season and certain cryptocurrencies are marking staggering gains. Everex (EVX) was one of them, having marked a 300 percent increase in just a couple of days a few weeks ago. The presence of an altcoin season was further highlighted throughout Bitcoin’s latest surge. Despite having gained over 25 percent of value in a few days, Bitcoin’s dominance index remained relatively low. At the time of this writing, it’s at 50.8 percent, meaning that altcoins are also holding strong.
With the above in mind, it’s somewhat easy to see why would people want to have investments in altcoins. They have the tendency to skyrocket in price (risk-reward ratio), hence bringing huge returns to those investing in them, especially during the presence of an altcoin season.
The Risk Indeed Is Huge
While altcoins provide for notable and relatively quick gains, they are also comparatively riskier. The notion of big returns has been brought up plenty of times, but there are important investment principles to be considered.
Just because it’s cryptocurrency, it doesn’t mean that one should gamble, so to speak, betting on volatile altcoins in search for high yields. The proper combination of cryptocurrencies in one’s portfolio is absolutely critical and it should be comprised after careful and diligent research.
Moreover, it’s important to note that altcoins are typically traded against Bitcoin. Hence, if there is a major crypto sell-off, people are first going to sell their altcoins for BTC and then sell their BTC to hedge out for FIAT. In an event of the kind, Bitcoin may drop, but altcoins are likely to drop a lot more – exactly like we’ve seen in 2018 bear market. That’s why it’s important to have a well-balanced portfolio.
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Source: Crypto Potato