The current trend in the crypto market has caused investors to reevaluate their positions in digital assets like Bitcoin. As the market boomed and the infamous altcoin season flourished, many investors had flocked to small-cap altcoins for big gains. However, with these digital assets now in decline, investors have had to find “safer” alternatives that have landed them squarely back in the arms of bigger companies like Bitcoin.
Small caps are beaten
As with any down market, small caps have borne the brunt of the losses. They have clearly outperformed the other indices. Therefore, it is imperative for investors to exit these small-cap coins and into other indices that offer safe havens for now.
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The small caps have been the best performers during bullish rallies through to major market rallies. They are often the first port of call for investors looking to make big profits in a short amount of time. However, their tendency to grow very quickly also makes them vulnerable to large price declines that the market is now seeing.
Small Caps Index Posts Most Losses | Source: Arcane Research
The performance of the small caps index was nothing special as it caused investors to lose -46%. It’s almost half where they were trading at the start of the year, making them a consistently poor performer throughout the first quarter of 2022.
Bitcoin to the rescue
With small caps no longer able to repay the massive gains that investors have drawn to them, the alternatives now remain the large cap coins that have held out in the market. Most notable of these was pioneer cryptocurrency Bitcoin, which was one of the best performers of any index.
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Bitcoin, while posting losses, has held up quite well. It’s one of the best-performing indices, down just 20% year-to-date. Trailing only behind exchange tokens, they lead the pack with a mere 14% loss from where they started the year.
BTC maintains support level | Source: BTCUSD on TradingView.com
For comparison, DeFi tokens have fared almost as badly as the small-cap index, down 45% year-to-date. It is followed by the mid-cap index, down 33% since early 2022.
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The large-cap index also trailed the mid-cap, down 32% through the end of the first quarter. Privacy tokens fared better in this regard, as they themselves also saw a 31% drop.
These losses in all other indices have prompted investors to get back into Bitcoin. This allows them to cut their losses while waiting for the market to recover.
Featured image from Forbes, charts from Arcane Research and TradingView.com
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