Altcoins: 5 Reasons a Price Drop is Inevitable

After a strong rally taking more than a week, altcoins are turning back the clock, sliding fast within hours.

Altcoin cycles never go without a slide to lower prices. With a few exceptions, one day in the green is often followed by prices sliding back to lower levels. Altcoins still see their dominance in terms of market capitalization increase, while the dominance of BTC gets lower in proportion.

The trends turn quickly from buying to selling, and there are several factors behind that:

A Return to Bitcoin: Once a coin seems to peak in BTC prices, some traders will not hesitate to take profits into what they consider the best store of value and possibly the only secure coin. The current rally is significant in that a lot of coins not only gained in dollar terms, but actually drew in investments from trading against Bitcoin. This would mean that once the trend turned, traders would reap the profits.

$crypto #altcoins

— CryptOrca (@CryptOrca) April 24, 2018

Bot Trading: The recovery for altcoin has been robust when compared to recent low prices. This time, however, traders may be eager to reap profits without waiting too long, knowing that rallies end. The sudden reversal of markets may be due to automatic selling getting triggered.

No Trust in Altcoin Projects: For almost every hot coin now, there are skeptics pointing out flaws in the technology, or a lack of product. For some, owning altcoins has no meaning beyond the chance to flip them for profit. Hence, altcoins may not rally forever, with a few exceptions where a strong community holds the asset and does not sell easily.

Moving to Better Opportunities: With altcoins experiencing pumps almost every day, moving from an asset that already seems to peak into another “sleeper” seems like a reasonable strategy. With dozens of coins already available on larger exchanges, there are times where a particular asset will always outperform.

The Effect of Various Trader Communities: The hype around a coin affects trading communities differently. Asian and US investors may prefer different assets. At the same time, a drop in prices on one market may affect all others.

No asset can appreciate all the time, and so far, coins have shown they are on an upward trend. Moreover, the larger spike in prices is expected to happen in May and June, given the usual behavior of the market in past years. However, the exact speed of the boom and possible bust are unknown. It is best to perform one’s own due diligence and research, and settle on target prices.

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