Riding on the back of Bitcoin’s surge to $45k, most of the alts started witnessing upticks. Interesting, at the time of writing, only 12 cryptos out of the top 100 reflected negative weekly returns. The remaining 88 seemed to be relishing their gains.
Picking alts for your portfolio, at this juncture, might be pretty daunting. However, analyzing correlation, profitability and ownership distribution might help.
Correlation
Historically, alts that have been more dependent on Bitcoin and Ethereum’s movements, more often than not, reaping benefits from their rallies. Hence, the correlation that different cryptos share with the market’s largest coins becomes quite crucial in judging which whether or not they deserve a place in portfolios.
ADA’s correlation to BTC || Source: IntoTheBlock
At the time of writing, a host of alts shared a decent correlation with both Bitcoin and Ethereum. However, Cardano [0.87, 0.87], Chainlink [0.86, 0.87] and Litecoin [0.88, 0.84] managed to stand out when compared to others. Ergo, going forward if Bitcoin and Ethereum’s bullish narrative gains momentum, these three alts would likely benefit the most.
Profitability
Cardano’s price, at the time of writing, stood at $1.47. At the aforementioned press level price, close to 68% of HODLers were in profit. Similarly, Litecoin and Chainlink were trading at $154.36 and $24.39 respectively. Again, as far as profitability is concerned, close to 62% of LTC HODLers and 58% LINK HODLers were in profit.
Usually, participants tend to exit the market right after booking profits. A completely new set of market participants stepped into the crypto arena during the hyped up April phase. However, profitability took a hit during mid-May’s fatal crash, and since then, HODLers have desperately been waiting for a trend reversal.
Hence, the odds of such participants exiting the market in the next few days seem to be fairly
