Yea my alts are up.....are they?

Ok ok hold up, lets not get to excited…….. If you are currently looking at the USD value of your favorite ALT coins right now or gazing over your Port Folio of various Crypto coins and rejoicing that you are “Back in the green” you are some what mistaken.
Like many others, if you have entered to Crypto market over the last year or 2, there is a good chance you have only ever known the USD value of your coins and never really understood how the crypto market works or its correlation to the price of bitcoin.
You see like all financial markets there is a Base currency in which you are trading against, when you’re trading stocks on the ASX you’re trading against the AUD, when your trading stocks on the US markets your trading against the USD. If you have ever traded in the Forex currency markets you will know you are trading against a lot of different currencies using a method of arbitrage, and the crypto market is no different.

You see in the crypto market there are essentially 2 main market, BTC and USD, although there is also an ETH market, ETH itself is sucked into the arbitrage triangle placing even more confusion on the ETH pairs. Because your alt coins are paired against BTC and USD on most exchanges, it creates an arbitrage triangle that allows people to exploit the spread between 2 different values of the same asset.
Because of this spread, there is money to be made by trading the difference, which only closes the spread and causes a strong +1 or at times -1 correlation to BTC.
There is no way to shake this peg, and this is why we look at the value of our alt coins, not by its FIAT value but by its BTC value, If your Alt coins are not gaining in BTC value (SATS) then you aren’t winning……Bitcoin is.

I’m going to show you an example now that may cause the penny to drop for you, It is an example of ADA getting sucked into an arbitrage triangle with BTC and USD.

ADA/USD 20/07 14:00 – 29/07 10:00

To make this fair, I took these measurements from candle closes on the 4hr time frame, and I used the same date and time periods to compare price action between all 3 charts.

Now if you’re a hodler of Cardano or maybe you recently bought the bottom like a champ, you are probably pretty chuffed with your self and thinking you really have a nack for this.

If you bought $1000usd worth of Cardano at the start of this example you would have purchased a total of 958.77 ADA @ $1.043usd each. Your current bag of ADA is now worth $1224.34 at the current price of $1.277usd

A 22% gain in less than 10 days…….. watch out Buffett there is a new kid in town, But before you quit your job or start a YouTube channel lets take a look at another chart below.

ADA/BTC 20/07 14:00 – 29/07 10:00

Now if we take a look at Cardano against BTC, you will see almost the complete opposite, in fact during that same time period Cardano has actually lost 8.59% of its Sat value….

So using the same example as above, when we first bought our ADA tokens they had a SAT value of 3512 or 0.00003512 BTC each, that means our 958.77 tokens had a total value of 0.03367200BTC.

At current price of 3208 or 0.00003208 BTC our 958.77 tokens are only worth a total of 0.03075734 BTC…….
Some where over the last 9 days, we have actually lost 0.00291466 BTC which has a current value of $116.86usd, In other words if you didnt buy ADA with your Bitcoin you would have actually made a lot more money.

hmmmm curious yet? lets take a look and see for yourself.

BTC/USD 20/07 14:00 – 29/07 10:00

Now we take a look at the market driver aka Bitcoin, as you can see over that same time period Bitcoin has actually risen by 33.37%.

At the same date and time, if you bought $1000usd worth of Bitcoin you would have purchased roughly 0.03323694 at the price of $30,087usd
Bitcoin is now worth $40,094 and your 0.03323694 BTC has a USD value of $1332.60usd (I think I found that missing $116 worth of bitcoin)

Right now with the dominance coming back up on Bitcoin, the Alt markets have been bleeding sats and may continue to bleed for a while yet. If you’re seeing a rise on the USD value of your PF, its only because Bitcoin is dragging your uneducated decisions up with it.
So before you go quitting your job, you may want to devote some time to your education on how this thing really work if you want to take this seriously. I also suggest getting some education out side of the Crypto Echo Chamber of misguided and inexperienced gurus.

Now I often get arguments against this whole theory and people saying things like “I’m here to make dollars I dont care about Bitcoin” or “The aim is to make money and I did so who cares” and you know what…. You’re right, who cares? you can trade which ever way you like, it doesnt effect me.
But I don’t create these articles for those people, I put this information out so that people who have an open mind and want to learn how to become professionals and be more efficient at there craft can learn from others and become the best that they can be.

I’ll leave you with this analogy:
We are all here to make money right?
We put in work, we put in time, our effort, energy and we take risk’s for reward, just like a normal job right?

If you where working in a factory, stacking shelves for $20 an hour and you find out the guy beside you gets paid $40 an hour to do the exact same job
Wouldn’t you want to know why? or would you just say…
“I’m here to make dollars I dont care what his doing different” ?

Think about it

Peace

Yea my alts are up…..are they?