The crypto market is seeing investors reconsider their position in digital assets, such as bitcoin. Investors jumped to small-cap altcoins as they saw large gains. However, with these digital assets now in a decline, investors have had to find ‘safer’ alternatives which have brought them right back into the arms of larger caps like bitcoin.
You can beat small caps
As with every declining market, the loss has been disproportionately felt by small caps. The small cap indexes have performed poorly compared to the rest. Investors should therefore get rid of smaller caps coins and move to safer havens.
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During the bull rally and all subsequent market recovery, the small caps were the most successful. These are the most reliable source of information for investors looking to quickly make big gains. They are also susceptible to price drops due to their rapid growth, as is the case right now.
Small Caps Index suffers the greatest losses. Source: Arcane Research| Source: Arcane Research
As investors have lost -46%, the performance of the index small caps has not been impressive. They are now trading almost 50% below where they were at the beginning. This makes them a poor performer for the first quarter.
Bitcoin is the Rescue
Small caps can no longer return the large gains that have been attracting investors to them. The alternatives are the larger cap coins which have held their value in the market. The most notable example of this is Bitcoin, the first cryptocurrency and one of the top performers among all the indexes.
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Despite the fact that Bitcoin can also return losses, it has performed well. This index is the most stable, having experienced a 20% decrease since the beginning. It is closely followed by the exchange tokens, which only suffered a 14% decline from the beginning of the year.
Source: BTCUSD tradingview.com| Source: BTCUSD on TradingView.com
The DeFi tokens, which have fallen 45% in value since the beginning of this year, are performing nearly as poorly as the small-cap index. The mid cap index is next with 33% losses from the start of 2022.
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With 32% of losses in the last quarter, the large cap index is closely tracking the mid-cap. The privacy tokens fare better as they have experienced a 31% drop.
Investors are now reorienting their investments to bitcoin after the losses of all other indexes. Investors can then mitigate their losses and wait for the market’s recovery.
Featured image taken from Forbes.