The theory of crypto market cycles suggests that there is a significant bull market approximately every four years, usually triggered by the Bitcoin halving. Within these major cycles, there are smaller cycles where certain altcoins may outperform Bitcoin. However, the risk lies in not exiting the altcoin position in time, as the value of the altcoin may never recover. This raises the question for Cardano (ADA) holders – is it worth holding onto ADA?
Popular analyst Caleb Franzen recently highlighted the opportunity cost of holding Cardano. Over the past 34 months, Cardano has lost 90% of its value relative to Bitcoin, indicating significant underperformance. Franzen points out that ADA is currently trading at its lowest point since December 2020, making it a challenging investment for those who entered the market in recent years. This observation leads to the conclusion that trading alts may be more beneficial than investing in them, as they struggle to keep up with BTC over the long run.
Cardano is not the only altcoin facing challenges against Bitcoin. Other altcoins such as XRP, ETH, and TRX also display similar patterns of underperformance. However, there are some altcoins like SOL and BNB that have managed to outperform BTC in 2024. The comparison changes when zooming out the chart to a certain degree, indicating that certain altcoins may still have potential for growth in the long term.
In light of these observations, it is important for investors to consider the opportunity cost of holding onto altcoins like Cardano. While there may be short-term gains during certain market cycles, the long-term performance of altcoins against BTC may not be as favorable. This raises the question of whether it is more beneficial to actively trade alts rather than holding onto them as long-term investments. By understanding the market cycles and analyzing the performance of different altcoins against Bitcoin, investors can make more informed decisions about their crypto portfolios.
In conclusion, the theory of crypto market cycles highlights the importance of considering opportunity cost when holding onto altcoins like Cardano. While there may be short-term gains during certain cycles, the long-term performance of altcoins against BTC may not be as promising. It is essential for investors to weigh the risks and benefits of holding onto altcoins versus actively trading them to maximize their returns in the ever-evolving crypto market. By staying informed and analyzing market trends, investors can make more strategic decisions to navigate the volatile crypto landscape effectively.
