"I bought 10 altcoins to diversify the risk, and they all crashed," is the most common complaint in the backend recently. Watching the MarketVector Digital Assets 100 small-cap index drop to its lowest level since November 2020, I am not surprised at all. Many people think that 'not putting all your eggs in one basket' can help them survive a bear market, but they forget that in the cryptocurrency bear market, most baskets are already leaking. This is the second fatal misconception: mistaking diversification of altcoins as a safety net.
Dry Goods Warning: Just compare the three sets of data to understand. From 2024 to 2025, the S&P 500 Index has a cumulative increase of 47%, the Nasdaq 100 Index has risen by 49%, while the CoinDesk 80 Index, which tracks 80 types of altcoins, plummeted by 46.4% in the first quarter of 2025, with an annual decline of 38%. What’s even more heartbreaking is that the correlation between the CoinDesk 5 Index (top cryptocurrencies) and the CoinDesk 80 Index is as high as 0.9, meaning their trends are completely synchronized, but the former rose by 12% while the latter fell by 38%. What does this indicate? Buying altcoins in a bear market not only fails to yield diversified returns but also incurs the additional risk of a crash in 'junk assets.'
I have always emphasized: liquidity in a bear market will migrate towards high-value assets. Although the total trading volume of altcoins will rebound to 2021 levels in 2024, 64% of the trading volume is concentrated in the top ten altcoins, while the remaining small coins are basically 'zombie coins' that will crash with even a slight sell-off. Those who tell you to 'buy altcoins at the bottom in a bear market for double returns' are either project teams looking to profit from naive investors or newcomers who have never experienced a bear market. In the bear market of 2022, I bought into 3 altcoins at the bottom, and in the end, only 1 survived, and it was purely by luck.
Friends who still hold a bunch of unknown altcoins, stop comforting yourself with 'it will go back up eventually.' The core of a bear market is 'survival,' and the first step to surviving is to clean up garbage assets.
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