When investing in cryptocurrency, there is one question every investor should always be asking: “Is it better to be in Bitcoin right now or in this particular Altcoin?”  I certainly agree with the merits of diversification but there are times when one’s portfolio should be overweight Bitcoin and other times when the Alts are the better place to be.  Knowing when to make the switch is the tricky part.

July saw Bitcoin prices rise by over 30% after finding a low near $5800 at the end of June.  A major catalyst for this rally was renewed excitement around a potential Bitcoin ETF being approved this year.  As a result, many of the alts lost ground relative to Bitcoin even though July was such a strong month for crypto compared to the corrections we saw in May & June.

While the BTC dominance has increased to over 48%, the total cryptocurrency market cap value has remained relatively flat over the past few weeks due to the shift of capital from the Alts back into Bitcoin.  We have seen these cycles before and the chart above shows two recent times when Bitcoin’s dominance increased significantly.

During September to October of 2017, we saw a 40% increase in the BTC dominance.   January to March of 2018 also saw a 36% rise relative to the alts.  This recent run has seen the dominance grow by 33% since May.  The question is how much further will it increase before the Alts stage a comeback rally?

Altcoins or BTC?

The portion of my capital allocated to my “long-term HODL” has been predominantly in Bitcoin for the past few months.  I started June with a split of 60% BTC/40% alts and it has risen to over 80% BTC now.  I’m personally taking a hard look at the Alts here and I believe it’s time to start re-allocating some Bitcoin back into the Alts.

Below are the daily charts for several big-cap names to highlight the declines since May relative to Bitcoin and the oversold conditions that are currently present.  While they could certainly continue lower, I will be looking for signs of reversals and climactic selling to signal that the lows are in.