Last week, nearly all cryptocurrencies across the board experienced double-digit declines. Yet, it should be noted that coins with the largest market capitalizations tended to fare much better than the rest of the market.
Recent market movements in the past week are underscoring the trend that larger market cap coins tend to perform better than the rest of the digital asset market.
- Cryptocurrencies with a market capitalization of over $500M experienced losses on average of around 12.5 percent.
- Cryptocurrencies with a ‘medium’ market capitalization ($100M to $500M) saw 13.28 percent declines.
- Smaller cap cryptocurrencies with market capitalizations of under $100M saw declines of around 15.4 percent.
The results are not that surprising when we consider that larger coins generally have more liquidity. Higher trading volumes mean that these assets generally have a harder tumble when the market slips. Smaller cryptocurrencies though find themselves struggling because they have little support and many are poorly-established in the market and are more speculative.
Weathering a Storm
However, for those looking to leverage risk with larger cap coins like NEO or Ethereum (ETH), it is not much of an improvement from the overall market. Still, holding Bitcoin, by far, would have allowed for the least losses and some of the highest returns for all of 2019. Larger cap coins may have dropped less than the rest of the market, but the difference is fairly negligible.
So, overall, if you are looking to weather a bearish short-term move in the cryptocurrency market, you are best off either holding Bitcoin or a major fiat currency. Most traders should consider keeping a majority of their holdings in Bitcoin for this purpose alone since it allows one to easily scoop up cheaper altcoins if they so choose.
Do you believe that this trend will continue to be true throughout 2019? Will Bitcoin always have the least downside in the market? Let us know your thoughts below.
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