After some high gains, high euphoria, and higher greed, the market underwent a flash crash leaving investors and traders baffled. Longs were liquidated and outflows saw a rise, as yet again investors questioned their portfolios or allocation amid a crash. Nonetheless, some altcoins like Algorand held better than the others and this raised the question of choosing the right coins for your portfolio.
However, selecting the right altcoins from the sea of alts isn’t easy. While most newer participants seek low-priced, highly popular assets like XRP and Dogecoin which offer a good entry point, it is ideal to have the right balance of risk to reward for a good portfolio. This article will be looking at some of the top alts to understand if they will make a good addition to the portfolio in the future
Market dependency
Market participants at large aren’t concerned so much about the price as they are about the ROIs, network strength, functionality, long-term growth, and risk associated with the asset. But if one gets an altcoin that offers lower investment with high returns, it would be like a cherry on the cake. Notably, this bull run brought lower-priced alts like Algorand and Stellar Lumens to the forefront as they did pretty well this season.
Algorand traded at $2.1 at press time and saw a multi-month price high on September 9, the alt seemed to hold pretty well even after the flash crash. On the contrary, Stellar Lumens (XLM) traded at $0.33 and saw an almost 25% fall, likewise, XRP saw an almost 24% drop following the recent dip. However, MATIC saw a comparatively lesser price shed (20%).
Noticeably, the price of these four low-valued alts was affected by Bitcoin’s crash but they all showed different recovery potentials. Nonetheless, the question remained whether these under $2 alts gave better ROIs than more valued alts? Understanding their metric-driven data can indicate which of them is a suitable investment.
Volatility is the name of the game
External factors affect alts’ prices more than one can anticipate, take XRP for instance, the entire SEC vs Ripple fiasco had a negative impact on the token’s price. However, the token has a huge potential to blast off once Ripple wins the ongoing lawsuit. On the other hand, Stellar Lumens, which has a similar use case to XRP in many arenas, could massively profit if the outcome of the lawsuit goes against XRP. Either way, both XRP, and XLM have been rather volatile, of late.
When it comes to allocating a decent amount of the portfolio to a coin, traders and investors generally stay away from high volatility coins. As for MATIC and Algorand, both have shown low deviation from the trajectories. Thus, if one had to have a combination of low-priced and high-priced altcoins in their portfolio, these can be a good addition.
Is the risk worth it?
If one allocates equal amounts of money to higher-priced alts and lower-priced with similar ROIs then lower-priced alts would inevitably generate higher returns. But this wasn’t the case for MATIC and XLM as both the alts presented negative ROIs in both long-term and short-term. MATIC’s weekly ROI was -19.38% and 3 month ROI was -12.48%. Likewise, XLM’s weekly ROI was -15.80% and 3 month ROI was -2.36%, at press time.
On the other hand, Algorand was a clear winner in terms of ROIs highlighting 72.25%, weekly ROI, and 114.65% three-month ROI. While XRP’s weekly and three-monthly ROI was -15.37% and +24.19%, respectively.
Thus, looking at volatility alongside ROIs while XRP and Algorand would make a good addition to the portfolio, investors could stay away from XLM. MATIC on the other hand as a long-term investment could be a good option looking at its high market cap, lower volatility, and trustability.
