30s Summary

Investors have noticed a decreasing number of alternate cryptocurrencies (alts), outperforming Bitcoin since 2021, in contrast to significantly higher returns found pre-2020. Today, only 10-20% of the top 150 tokens outpace Bitcoin, suggesting that high returns may require more skill and research than previously necessary. Despite this, diversification remains key to reducing risk, and alts are touted to have a bright future. The views were shared by the author in the weekly cryptocurrency insights section, Crypto Long & Short.

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A lot of people with digital assets find themselves comparing their investment performance to Bitcoin. It’s almost become a sort of mental benchmark. And for good reason, as it’s proven to be a tough one to beat over the past several years. In fact, many investors are throwing in the towel on alternate cryptocurrencies, commonly known as “alts”. But has Bitcoin always been this unbeatable?

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We even took a look at some data. Scanning from back in 2019, we checked out the performance of the top 150 tokens by market cap to see how they stacked up against Bitcoin over the years. We picked top 150 tokens because it creates a realistic baseline for an average investor mulling different strategies.

Back in 2019 and for most 2020, many of these tokens were outperforming Bitcoin by a big margin. In many cases, the yield was well north of 1000% as compared to Bitcoin’s own commendable returns. Surprisingly, it didn’t take much research to find these high performing tokens, which averaged a market cap rank of about 30 prior to 2020.

Things took a turn after 2021. Now, only 10-20% of the top 150 tokens have outperformed Bitcoin at any stretch in the following years. The average outperformance compared to Bitcoin was about +100%. The average market cap rank of these top performing tokens has also increased, fluctuating between ranks 60-80.

This doesn’t mean Bitcoin is undefeatable, far from it. The new trend suggests that earning big returns now requires more skill than maybe five years ago. The crypto market has evolved, and investors tend to demand tangible results along with growth visions from cryptocurrencies. But if you can pick the high-performing names, there’s still significant potential for gain.

Cryptocurrency markets continue to show incredible returns, following a power-law distribution. In this set up, a few big winners drive the overall positive result for a portfolio. In such a situation, diversification is key, something investors seem to neglect. In essence, it may be time for investors to adopt VC-style approaches to diversify their portfolio, thus reducing risk and reaping the benefits of the liquid secondary market.

As for alts, they have a bright future. But, let’s face it, investing in this space will need a lot more skills and research than it did in the past. Please note that the information here is only for general knowledge. It’s not investment advice since investing has its fair share of risk. Always refer to terms & conditions before investing.

Please remember, the views expressed here are solely from the author and not necessarily of CoinDesk or its affiliates.