- The concept of market cycles in the cryptocurrency sector has been a topic of discussion for many years.
- Many traders and analysts suggest that a bullish market trend occurs approximately every four years, typically triggered by the Bitcoin halving event.
- During these broader cycles, numerous smaller cycles emerge, often leading to situations where certain altcoins outperform Bitcoin temporarily.
Explore the dynamics of cryptocurrency market cycles and the implications for altcoin holders, with a focus on Cardano (ADA) and its performance relative to Bitcoin.
The Drawbacks of Holding Cardano (ADA) Over Time
Prominent cryptocurrency analyst Caleb Franzen recently highlighted a significant issue concerning Cardano (ADA) on social media platform X.
Cardano has depreciated by 90% relative to Bitcoin over the past 34 months.
The opportunity cost is substantial for ADA holders… it’s been a costly hold.
Source: Caleb Franzen, X.
Franzen further notes that ADA is trading at its lowest levels since December 2020. For many investors who entered the market in recent years, this performance might be particularly unsettling.
Moreover, the analyst makes a critical observation:
This pattern is why I prefer trading altcoins rather than long-term investing in them. They don’t match BTC’s performance in the long run.
Comparison with Other Altcoins
This underperformance isn’t exclusive to Cardano. Other altcoins exhibit similar trends when measured against Bitcoin.
Here’s a look at XRP’s performance relative to BTC over the past year:
Source: CoinMarketCap.
The same can be observed in Ethereum (ETH):
Source: CoinMarketCap.
And in TRON (TRX):
Source: CoinMarketCap.
While some altcoins, like Solana (SOL) and Binance Coin (BNB), have outperformed Bitcoin recently, the trends shift significantly when reviewing their performance over a more extended period.
Conclusion
The data suggests that while altcoins may offer substantial short-term gains, their long-term performance often fails to keep up with Bitcoin. This dynamic highlights the importance of understanding opportunity costs and making informed investment decisions in the volatile cryptocurrency market.
