The beginning of 2023 was positive not only for Bitcoin supporters, but for almost the entire cryptocurrency market. The leading coin has grown in price since the beginning of January by 36%, some alternative coins have risen in price by tens of percent.
However, not all assets, after a significant increase, are delayed at the level of their maximum values. Often, tokens both “take off” and collapse.
The experts told RBC-Cryptowhat affects altcoin rates, which coins look promising at the moment, and what risks an investor who wants to invest in cryptocurrencies may face.
“Investing in altcoins is a long-term investment”
Speaking about the prospects for altcoins, one cannot ignore the general trends of the crypto market, says Artem Deev, head of the analytical department at AMarkets. Reputational losses after the collapse of the FTX exchange, a domino effect on the market (Genesis broker filed for bankruptcy last week), increased regulatory pressure, a global crisis, as a result of which investors are reducing and will continue to reduce investments in risky assets – all this affects not only the leading cryptocurrencies , such as Bitcoin and Ethereum, but also on the value of altcoins.
These factors create a trend towards a further decline in the crypto market, the expert believes. According to him, it is not worth expecting altcoins to grow against the general trend.
In addition, there are mathematical models that show the relationship between bitcoin and altcoins, Deev recalled. On the one hand, altcoins maintain interest in the first coin of the market, on the other hand, the behavior of bitcoin leads to the fact that other cryptocurrencies repeat its movement, the expert explained.
He also drew attention to the periods of fall and rise of the crypto market, which are gradually increasing. Now there are predictive models that say that the recovery of the crypto market can take up to five years, and we are not yet at the lowest point of the fall in the value of coins, the analyst believes.
Based on these aspects – the general trend in the crypto market, the connection of other coins with bitcoin, and the frequency of ups and downs – it should be understood that investing in altcoins is a long-term investment, says Deev. At the same time, the expert believes that the share of altcoins in the market will gradually grow. And bitcoin, which occupies almost half of the market, will lose ground.
Cryptocurrencies such as Ethereum (ETH), Litecoin (LTC), Ripple (XRP) and Monero (XMR) have the highest growth prospects among altcoins in the long term, Deev believes. According to the expert, at the moment it is worth investing only in those assets that can grow in price over a long period of time.
Of the altcoins worth considering for purchase, you can turn to artificial intelligence (AI)-related tokens, says Roman Nekrasov, co-founder of the ENCRY Foundation. He noted that the trigger news for this area was the statement of Bill Gates, who said that AI is a “really big thing”, and AI projects are revolutionary.
Another trigger for the growth of attention to AI tokens, the expert called the message of Elon Musk, “the famous king of market manipulations.” Billionaire wrote on Twitter (the social network is blocked in Russia) that 2023 will be the year of AI. Nekrasov added that such statements are partly provoked by the appearance of the ChatGPT neural network, which, although it does not meet the criteria for general artificial intelligence, has made a big splash on the market.
According to the expert, it is worth taking a closer look at the Ocean Protocol (OCEAN) and Fetch (FET) tokens. However, the latter is already trading at local highs and to enter, you will first need to wait for a correction, which is likely to take place in February, the specialist warned.
Ocean Protocol is a platform for trading data, including those used in working with artificial intelligence (AI). The main goal of the Ocean network is to create a global data supply chain for AI. The OCEAN protocol token rose by 125% over the month, from $0.16 to $0.36. The current price is 81% below the all-time high of $1.93 shown in April 2021.
Fetch is a decentralized “economic internet” infrastructure project based on artificial intelligence and machine learning. The goal of the project is to optimize the use of resources, automate processes, and develop algorithms for collective learning of Internet of Things (IoT) devices. The FET token has grown from $0.095 to $0.28 in a month – by 194%.
Since there are no fundamental prerequisites for a long-term bullish cycle in the crypto market, the current increase in the cost of altcoins is accompanied by high volatility, says Nekrasov. He noted that their recent growth is connected with this. According to the expert, we should expect the same significant correction in the next couple of weeks.
At the same time, the specialist recalled that altcoins always have risks – this is an even more risky asset than bitcoin. When the market is stormy due to macroeconomic signals from regulators, the first thing investors do is sell such excessively risky assets, Nekrasov recalled.
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I’m Meagan Diaz, a news writer and author at World Stock Market. My main focus is on technology and stock market trends, and I’m passionate about helping readers stay informed on the ever-changing landscape. I bring extensive knowledge of the industry to my work as well as a knack for storytelling that makes my articles both accessible and engaging.