📌Altcoin Investment Strategy Utilizing Bitcoin
Bitcoin plays a unique role in the cryptocurrency market. Many investors consider Bitcoin as “digital gold” and closely associate its movements with those of other altcoins. Below is an explanation of how Bitcoin can be used as an indicator for coin investments.
📈 Correlation between Bitcoin and Altcoins
Bitcoin serves as an indicator in the cryptocurrency market. In the absence of major negative or positive news, the direction of Bitcoin aligns with that of most altcoins. This correlation is due to Bitcoin’s tendency to lead the price movements. By monitoring Bitcoin’s movements, one can predict the direction of the altcoin market.
💡 Utilizing Bitcoin for Altcoin Investment
- Bitcoin’s Rise and Subsequent Altcoin Rise: Historical data analysis indicates that when Bitcoin experiences a significant surge, altcoins tend to follow suit afterward. Therefore, a strategy of observing Bitcoin’s movements and selectively buying altcoins with high trading volumes can provide profitable opportunities.
- Relationship with the US Market: The interest of US investors and the opening hours of the US market (US Eastern Time: 10:30 AM or 11:30 AM in Korea) significantly impact Bitcoin. The movements of Bitcoin during the US market opening hours have a substantial influence, and Bitcoin tends to follow a similar trend to major US indices such as NASDAQ. Considering this information when making investment decisions is crucial.
The directionality of NASDAQ and Bitcoin seems to be similar as shown above. However, recently, the US market has surged due to the semiconductor, IT, and AI boom, while Bitcoin has experienced a decline following the rejection of physical ETF approval, leading to a decoupling.
Nevertheless, those who wish to take short-term trades based on trend following might find this information useful after decoupling.
✔ Significance of Bitcoin’s Direction: There have been cases where the entire cryptocurrency market experienced a decline due to the cancellation of Bitcoin’s physical ETF approval. Therefore, the direction of Bitcoin serves as a crucial indicator with a significant impact on the entire cryptocurrency market. Consequently, if one seeks a more conservative investment in the cryptocurrency market, opting for Bitcoin may be a suitable choice.
📄 In conclusion, Bitcoin plays a major role as an indicator in the cryptocurrency market, helping to understand the direction of the altcoin market by monitoring its movements. Particularly, formulating an investment strategy considering the opening hours of the US market and the interest of US investors is important. However, due to the high volatility of the cryptocurrency market, prudent judgment, thorough research, and appropriate risk management are essential when making investment decisions.