Altcoin Total Market Capitalization Analysis

Lifetime price movements of Bitcoin have been examined in detail. So, those involved in the crypto world know that the value of Bitcoin doubles on average every year. In fact, classic analyzes of Bitcoin's bull and bear market cycles have been put forward.

When the past price movements are examined, it is seen that altcoins have performed much better than Bitcoin. However, since their history is new compared to Bitcoin and their ups and downs are sharper, such analyzes are made less on altcoins.

However, when an analysis is made on the total of altcoins, it becomes possible to examine a longer time frame, and the excessive price movements are partially corrected.

The chart below shows how the total value of cryptocurrencies other than Bitcoin has evolved from April 2013 to the present. Values ​​are shown on a logarithmic scale in the chart.

Graph Source: https://coinmarketcap.com/charts/

I drew the red trend line on the chart. During the drawing, I tried to make the areas above and below the trend line equal. What the chart tells us:

• The total value of altcoins has increased nearly 20,000 times in the last 8.5 years.

• The total value has moved in a predictable direction, although it has moved away from the trend line from time to time.

• In 2021, prices followed a closer course to the trend line.

• Current prices are reasonable according to the model.

The model seen above shows that altcoin prices are increasing an average of 3.26 times each year. In other words, the total value of altcoins is increasing by 3.25 per thousand daily, according to the long-term average. This means that those who invest in altcoins and hold them for a long time have achieved an unprecedented return in the last 8 years. There is no sign that this trend will change in the coming period. On the contrary, as the years progressed, crypto became a concept that was partially accepted by official authorities and large companies.

Investing in altcoins is fine, but how can we choose the right altcoins? Certain altcoins can provide returns well below the crypto market after becoming popular for a period of time. For example, only 3 of the altcoins that were in the top 10 at the end of 2017 are in the top 10 today. (Ethereum, Cardono, XRP) Those who want to travel in time can examine the situation at the end of 2017 through this list: https://coinmarketcap.com/historical/20171231/

Having a high amount of Ethereum in the altcoin portfolio and removing the altcoins that do not develop over time can help protect the return of the portfolio. After all, we are talking about an asset class whose value is increasing by an average of 3.26 times every year. A somewhat lower-than-average return will probably not upset any investor.

The opinions I have stated are not investment advice. Because the author of these lines is not an investment expert.

Thank you for reading.

Cover Image Source: https://undraw.co/