Bitcoin’s volatility has been a challenge for many investors, with some considering it as the benchmark for digital asset investments. However, a recent analysis of data from 2019 to the present shows that beating Bitcoin has become increasingly difficult over the years.
In the past, many tokens in the top 150 market cap had outperformed Bitcoin by a significant margin, sometimes even surpassing 1000% returns. These tokens were relatively easy to identify, with an average market cap rank of around 30 before 2020.
However, the landscape has changed post-2021, with only 10-20% of the top 150 tokens beating Bitcoin in any 365-day period. The average outperformance has also moderated to around 100%, and the average market cap rank of these outperformers has increased to 60-80.
This shift suggests that selecting winning tokens now requires more skill than before. The cryptocurrency market has matured, and investors now expect tangible results from projects, not just promises. While smaller projects still have potential, the performance of top tokens remains significant, with returns of over 100% compared to Bitcoin.
Overall, the crypto market seems to follow a power law distribution, with a few tokens driving positive portfolio results. Diversification is crucial, and investors may benefit from adopting a VC-style approach to mitigate risk while taking advantage of the liquid secondary market.
It’s important to note that investing in digital assets carries a high degree of risk, and past performance is not a guarantee of future results. While alts have a promising future, navigating the market requires skill and careful consideration.
In conclusion, beating Bitcoin’s volatility is not easy, but with the right strategy and diversification, investors can navigate the market effectively. The evolving landscape of digital assets requires a nuanced approach, and staying informed and adaptable is key to maximizing profits in this volatile market.