When measuring your PNL in USD terms and not Satoshis, trading ALT/BTC pairs becomes more complicated. One must always keep an eye on BTC/USD, as that is the underpinning of an Altcoin’s USD valuation.
Based on recent market cycles, we do not see a divergence in Bitcoin performance vs. Altcoin performance. We have noticed the following trends:
- Bitcoin depreciates: Altcoins depreciate more swiftly, hence ALT/BTC pairs tank faster than BTC/USD.
- Bitcoin appreciates: Altcoins appreciate but generally not as heavily or as sustained as BTC/USD, hence ALT/BTC depreciates.
- Bitcoin moves sideways: USD value flows into Altcoins. ALT/USD prices appreciate, hence ALT/BTC prices appreciate because BTC is relatively stable.
With the above situations, in Scenarios 1 and 2, you don’t want to long ALT/BTC pairs. In scenario 3, you can long ALT/BTC pairs but why should you? With BTC relatively stable, longing the ALT/BTC pair and ALT/USD pair is essentially the same.
Therefore, from a USD perspective, it is always easier from a risk management perspective to long an ALT/USD pair over an ALT/BTC pair whenever possible. Some of our best analysts do not look at ALT/BTC pairs, instead they always pay attention to the value of altcoins in USD value for their opportunities to enter and exit.
Now from a practical perspective, access to liquid USD markets can often be challenging to find for Altcoins. Hence the USDT markets offer many exciting possibilities that our analysts and members and take advantage of frequently.