The market recorded another negative month, but the fundamentals are getting stronger.

Quick summary

  • Altcoins have outperformed Bitcoin for the third month in a row.
  • It is important to admit your mistakes quickly and adjust positions accordingly.
  • Protect your portfolio from the downside, and the upside will take care of itself.

Market overview

After a colossal rally at the end of October, the market consolidated for the next three weeks. Taking a closer look, we noticed a divergence between Bitcoin and altcoins. In the first 17 days of November, Bitcoin lost 7% of its value while altcoins cumulatively gained over 5%. This was followed by a huge selloff, as the market lost 20% in seven days. In the last week of November, the market managed to produce a small rebound, ending the month with a negative performance of -16.1%.

Monthly Commentary Chart MVIS

Altcoins, measured by the Bitwise 20 Mid Cap Crypto Index, fared better than Bitcoin in November and consequently outperformed it for the third month in a row. While Bitcoin is searching for its short-term direction, some Altcoin prices are surging. The top three performers in November from the top 25 assets by market cap were Tezos (49%), VeChain (48%) and Cosmos (22%). Consequently, Bitcoin dominance decreased to 66.7% at the end of the month.

Top 25 assets by market cap performance

The importance of an open mind in the crypto market

In my September monthly commentary, I stated,

I believe the recent market selloff has marked the end of this correction… This might be a good time to (re)enter the market or increase positions.

This obviously hasn’t been the case since the market dove deeper in the second half of November.

The call provided a good entry point, as the market generated a positive return in October, but then prices turned south again. Everybody is wrong occasionally, but it is important to accept the new reality and admit your mistakes quickly. This enables you to adjust your position accordingly and protect your portfolio.

Focus on the downside, and the upside will take care of itself

This title is actually a well-known saying in the financial industry. Risk is inseparable from return, and to be a successful investor, it is important to actively manage it. This is especially true for extremely volatile assets like cryptocurrencies.

At Solidum Capital, one of our top priorities is downside protection. We apply several advanced hedging mechanisms that enable us to protect our clients’ assets. While the crypto market lost 16.1% in November, our Solidum Cautus Crypto Hedge Strategy generated a gain of 1.8%.

Conclusion

Despite the recent weakness in the crypto market, fundamentals are getting stronger. The Bitcoin network hash rate is continuously increasing, and the same is true for individual investors’ interests. One example: Square processed $148 million in Bitcoin sales in Q3 2019, which is 8% of Bitcoin’s mining supply (!). The number of first-time buyers has approximately doubled.

While we are waiting for a catalyst to spark the continuation of the crypto bull market, more gateways are being built for both individual and institutional investors to enter the new asset class. In fact, Germany passed new legislation, which will allow banks to offer the sale and storage of cryptocurrencies in 2020. We can expect some serious fireworks in the coming months.

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DISCLAIMER: This article is for informational and discussion purposes only and does not constitute a marketing message, an investment survey, an investment recommendation, or investment advice. The article was prepared exclusively for a better understanding of market dynamics.

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