Diversification has been one of the things that has been recommended during the latter part of 2017 especially for new crypto investors. Just by taking a closer look at the top 50 digital currencies today, you’d agree that 2018 has been quite rough for both Bitcoin and top altcoins. Ripple dropped by 31% while Bitcoin Cash lost around 20%, and Cardano by as much as 37%.
In fact, the only digital asset that has been able to withstand the bearish trend is Digix DAO. Digital DAO was able to appreciate by 90% in the last 24 hours while the rest of the other altcoins and Bitcoin are dropping in value.
Mainstream media has tagged this as Bitcoin bubble popping. However, for those who understood cryptocurrencies, this doesn’t mean that you should panic. It has become a more common sequence for 2018 to see Bitcoin and other altcoins to drop in value. However, fresh downward corrections have been met by people who suggest that you should be buying low.
If you will ask investment platform BankToTheFuture creator Simon Dixon, he predicts that Bitcoin’s price bottom would eventually appear and consider $7,300 as the site of upward correction in the future.
Crypto vs. Regulators
Regulators are after cryptocurrency use in different countries. In fact, India, South Korea, and China are among Asian countries that are taking a tough stance of cryptocurrencies. For the recent drop in price, you can blame China’s ban on foreign cryptocurrency exchanges and ICO websites.
By the time the news broke out, the market cap hit around $310 billion according to the information on CoinMarketCap data. And since it has steadily dropped since mid-December 2017, a lot of questions are being raised whether or not it is still a wise idea to diversify in your crypto portfolio. Also, is Bitcoin ever going to recover?
John McAfee, a proponent of Bitcoin mentioned in his tweet that “Bitcoin does this every year at this time”. Could he actually be right?
Is It a Good Idea to Diversify?
Is it a good idea that you diversify your portfolio or should you just stick to Bitcoin? For a good number of investors, diversification makes a good move. However, you also have to consider the fact that Bitcoin usually drags everything up or down. However, there are some tokens that could stand out every now and then and give you profits while all everything else is falling. The sad thing about the crypto market is that there is no way of predicting which cryptocurrency is going to soar bigger than Bitcoin next.
There were many who are saying months back that Bitcoin Cash is going to provide a better alternative. Also, there are those Ethereum proponents that are saying that smart contracts and the ability to build apps can help shape Ethereum for the next years to come.
In reality, it is still a wait-and-see situation. And for 2018, a bearish trend in the market has been hurting many crypto investors for quite some time now. Volatility coupled with regulators’ actions, you will need to have a high risk tolerance before you think of investing in cryptocurrencies today.