4th Quarter 2016 BTC Pump & Altcoin Reaction

In the 4th quarter of 2016 BTC surged from approximately $600 to $1000, a  67% increase. This had some interesting and very obvious affects on almost all Altcoins. Only by remembering the past can we keep from repeating it.

Data below taken from Coin Market Cap.

Q4 2016 Ethereum – High of $13.28 on 10/01 down to $7.31 on 12/26 (45% drop)

ETH

 

Q4 2016 Decred – High of $1.14 on 10/03 down to $.42 cents on 12/27 (63% drop)

DCR

 

Q4 2016 SC – High of 75 sats on 10/01 down to 22 sats on 12/28 (70% drop)

SC

Let’s take the SC example and learn something important. Imagine today is October 29th, 2016. You have watched for an entire month as the price of SC has dropped from 75 sats to its current price of 53 sats. All around you people in the #trading channels have been buying what they thought were bargains, and then grumbling as somehow, inconceivably, Alts continued to fall. Not you though. You are holding some heavy bags, but are one of the lucky few who managed to save a little BTC just for this occasion. Siacoin is down 30% and has shown signs of recovery. What a bargain. There is no way it can fall further…

It is another two months before the price of SC starts slowly turning around, and March of 2017 before it gets back to 53 sats again. For five months that BTC was locked in SC waiting to just get back to what you paid for it… and you thought you were getting a great bargain.

That is a real life example that happened to me personally. All of my BTC was tied up, and when things really did start to turn around for Alts I had no way to buy. I learned important lessons including…

  1. Don’t try to catch a falling knife. If the crypto market (or an individual coin) is in freefall, don’t try to guess the bottom. Use the tools at your disposal, including charts, news and experienced traders, to decide when to get back in.
  2. If you make a call that is not going how you imagined it would, it is probably better to sell for a small loss than to hold on and get deeper and deeper into trouble. Selling for a 5% loss is difficult. Stomaching a 50% loss for five months is painful.
  3. Bitcoin is not just good to have for buying Alts. It is a digital currency also, and may give you a great return. A year ago I bought Bitcoin below $450. Today it is at $1400. You do not have to be 100% in Alts to profit, and sometimes it is really sweet to have that BTC on the side to buy with.

It is also worth noting, while the Bitcoin ratio of most Alts was ravaged, the downward pattern does not repeat for every coin. For example, Monero (XMR) was up in the 4th Quarter of 2016.

Take heart though. Remember BTC was up 67% USD in the 4th Quarter, so if the coin you are looking at was down 40% in relation to BTC, you were still ahead in fiat value.

Q4 2016 Bitcoin – Low of $609 on 10/01 up to $1050 on 01/04 (72% Increase)

BTC

For more analysis on related earlier article I wrote, please see Where To Be When Bitcoin Pumps

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