Some Alternatives to Bitcoin
These are pretty heady times for Bitcoin as it made a new ATH of $64,900 last month.
Every week, if not every day, another company is adding Bitcoin to its treasury or an institution announces that Bitcoin will be available for its investors.
This rise in price is not a surprise to those of you who understand how Bitcoin meets the properties of sound money and the potential advantages over fiat currencies.
What might surprise you is the size of the cryptocurrency space and the amount of capital allocated to altcoins.
Today, we will look at some examples.
First, let us look at the price chart of Bitcoin
****Click on any image to enlarge****
This is an impressive move.
Not many assets with this amount of capital allocated to it have appreciated this amount in this short of time.
The crazy thing about this move in Bitcoin is that numerous altcoins have had a more impressive performance.
Hard to imagine?
Let’s begin with a brief discussion of the cryptocurrency market.
While Bitcoin was the first cryptocurrency, Coinmarketcap now reports a total cryptocurrency market cap greater than $2.2 Trillion USD with over 9,500 cryptocurrencies available to trade or invest in.
Yes, that is correct.
$2.2 Trillion USD.
Most of that capital is allocated to Bitcoin, right?
The Bitcoin dominance chart below tells a different story.
This chart shows the % of the market cap allocated to Bitcoin.
As you can see, Bitcoin began with 100% of the cryptocurrency market cap and has dropped to 49% today.
The altcoins are attracting an enormous amount of capital.
Where is this capital going?
Let’s look at a few charts of the more popular altcoins to see how they have performed relative to BTC.
I find that pairing an altcoin against BTC is more effective at asset allocation than comparing against a fiat currency.
The first chart measures how the Binance coin has performed relative to Bitcoin.
BINANCE COIN (BNB)
This is a weekly chart of the BNBBTC pair.
As you can see, in 2021, BNB has outperformed BTC by a considerable margin.
Which would you rather have been invested in?
DOGECOIN (DOGE)
You may be aware of Dogecoin’s parabolic move with credit being given to Elon Musk’s tweets.
Dogecoin was started as a joke and I am not aware of the utility that it provides.
But, you know what?
That is not necessary to make a profit.
Look at how DOGE has outperformed BTC in 2021 with this weekly chart.
Again, DOGE or BTC?
Very impressive moves, but will they continue to outperform Bitcoin?
No asset goes up in a straight line forever, and eventually, there will be a correction.
When will this occur?
Nobody knows for sure.
In the meantime, we will keep riding the trend until the trend either slows down or stops.
What am I looking at now?
The following three charts look bullish to me and I will continue monitoring for an entry or add to my positions.
ETHEREUM (ETH)
Ethereum has been in the news with impressive gains also.
The next chart is the weekly ETHBTC pair showing how ETH has performed against BTC.
As you can see, ETH has been rising against BTC since September 2019.
Also, ETHBTC recently broke above and retested the trendline drawn from the ATH in 2017.
This is an extremely bullish chart to me.
LITECOIN (LTC)
This weekly chart of the LTCBTC pair shows the breakout above the trendline dating back to 2019.
While I anticipate a retrace to the trendline, this chart is bullish to me.
RIPPLE (XRP)
This XRPBTC chart is also bullish to me.
I anticipate that XRP will consolidate and then continue to rise relative to BTC.
I suggest watching ETH, LTC and XRP to see how they perform relative to BTC.
Perhaps this is a new way of looking at markets.
As traders or investors, we want to be in the best-performing crypto assets.
I believe that comparing altcoins relative to BTC can help with those decisions.
Ideas like this are presented daily in the Klarenbach Research Telegram group.
Come join us.
That is all for now.
Life is Good
I enjoy discussing the markets, whether they are currencies, equities, commodities, or bonds.
Let’s have a conversation, and we can explore a new perspective of the markets that you can apply to your analysis.
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