Following a period of high gains, euphoria, and greed, the market experienced a flash crash, leaving investors and traders perplexed. Longs were liquidated, and outflows increased, as investors questioned their portfolios or allocations yet again in the midst of a crash. Nonetheless, some altcoins, such as Algorand, performed better than others, raising the question of which coins to include in your portfolio.
However, picking the right altcoins from a sea of altcoins is difficult. While most newer participants seek low-priced, highly popular assets such as XRP and Dogecoin, which provide a good entry point, it is ideal to have the right risk-reward balance for a good portfolio. This article will examine some of the top alts to determine whether they will be a good addition to the portfolio in the future.
Dependence on the market
Market participants are more concerned with the ROIs, network strength, functionality, long-term growth, and risk associated with the asset than with the price. However, finding an altcoin that offers low investment with high returns would be the icing on the cake. Notably, this bull run pushed lower-cost alts like Algorand and Stellar Lumens to the forefront, where they performed admirably this season.
Algorand was trading at $2.1 at the time of publication, having reached a multi-month high on September 9. The alt seemed to hold up well even after the flash crash. In contrast, Stellar Lumens (XLM) traded at $0.33 and fell nearly 25%, while XRP fell nearly 24 percent following the recent dip. MATIC, on the other hand, saw a comparatively lower price drop (20 percent ).
The price of these four low-valued altcoins was obviously affected by Bitcoin’s crash, but they all showed different recovery potentials. Nonetheless, the question remained as to whether these under $2 alts provided better ROIs than higher-priced alts. Understanding their metric-driven data can help you determine which of them is a good investment.
The name of the game is volatility.
External factors have a greater impact on altcoin prices than one might expect. Take XRP, for example, where the entire SEC vs. Ripple saga had a negative impact on the token’s price. However, if Ripple wins the ongoing lawsuit, the token has the potential to skyrocket. Stellar Lumens, which has a similar use case to XRP in many arenas, on the other hand, could profit massively if the lawsuit is successful. In any case, both XRP and XLM have been quite volatile recently.
When it comes to allocating a significant portion of their portfolio to a coin, traders and investors generally avoid high volatility coins. MATIC and Algorand have both demonstrated low deviation from the trajectories. As a result, if one must have a mix of low- and high-priced altcoins in their portfolio, these can be a good addition.
Is it worthwhile to take the risk?
If the same amount of money is allocated to higher-priced alts and lower-priced alts with similar ROIs, the lower-priced alts will inevitably generate higher returns. However, this was not the case for MATIC and XLM, as both alts had negative ROIs in both the long and short term. MATIC had a weekly ROI of -19.38 percent and a three-month ROI of -12.48 percent. Similarly, at press time, XLM’s weekly ROI was -15.80 percent and its three-month ROI was -2.36 percent.
Algorand, on the other hand, was a clear winner in terms of ROI, with a weekly ROI of 72.25 percent and a three-month ROI of 114.65 percent. While the weekly and three-monthly ROIs for XRP were -15.37 percent and +24.19 percent, respectively.
Thus, considering volatility in addition to ROIs While XRP and Algorand would be good additions to a portfolio, investors should avoid XLM. MATIC, on the other hand, could be a good long-term investment option due to its high market cap, lower volatility, and trustworthiness.