As a cryptocurrency brokerage we are often seeing new clients come to us for alts. 

Hello, I'm new to Stormrake, can you buy Shiba, Akita, Dogwifhat, Kira the injective cat or HarryPotterObamaSonic10Inu Coin?

While its true that we can service a very large set of coins the question has to be asked - What's wrong with Bitcoin?

Do investors seek alt-coins because they want Diversification?

Warren Buffett himself is famously quoted saying, "Wide diversification is only required when investors do not understand what they are doing". For Buffett every investment needs to be thoroughly researched and understood. Once you have conviction it is ok to have an outsized position in a single asset that you actually understand. He was also quoted as saying "Diversification may preserve wealth, but concentration builds wealth". If you are trying to build wealth then diversification may actually be preventing you from having a chance of reaching that goal. 

In the context of crypto there are over 14,000 coins but Bitcoin is worth over 50% of all the top 125 coins. Effectively it is the majority of the market on its own. If you follow classic diversification over 50% of your portfolio should be bitcoin. 

Bitcoin leads the way and the rest follows. The whole point of diversification is bringing together assets that act differently at different times (Negative correlation). However, in an environment where the other coins are just following Bitcoin you may be just increasing risk by adding high volatility altcoins.

Overall, diversification is not a great reason to be collecting altcoins.

As the cryptocurrency world continues to grow everyday with new coins, new investors and new money entering the space. Bitcoin remains the benchmark for the entire industry. So why venture elsewhere? Especially for those new investors who are yet to grasp the nuances of this emerging asset class, the rationale behind exploring alternative cryptocurrencies doesn’t make sense. For a lot of people, the allure of crypto is the potential to make ‘quick and easy money’. New investors want to make a quick 100x by buying into the latest fad that some online influencer has promoted. However, veterans and mature traders understand that when something is too good to be true, it usually is and their warning signs start flashing.

As for the allure of altcoins, investors are drawn to the prospect of quick profits and speculative trading opportunities. Others are enticed by the promise of revolutionary technologies or visionary founders. However, amidst the frenzy of the crypto ecosystem and the enticement of making a quick buck, it's vital to keep a clear understanding of Bitcoin's unmatched value proposition.

Over the last 12 months we have witnessed the beginning of a bull market as the crypto market saw itself more than double in market cap reaching just over $2.2 trillion USD. As we know, when crypto markets rally, altcoins should outperform BTC. At the previous cycle, during the peak of the crypto space, 85 of the top 100 coins had outperformed Bitcoin. However, things were different over the past year, with only 29 of the top 100 cryptocurrencies outperforming Bitcoin. This is incredibly disappointing news to those who chose to hold altcoins rather than Bitcoin. As the crypto space grows, Bitcoin continues to mature, become more mainstream and recognised by traditional institutions, it will get harder for altcoins to outperform Bitcoin.

At the heart of the matter lies a fundamental truth: Bitcoin's dominance in the crypto space is here to stay. Since its inception, Bitcoin has consistently held the top spot in the industry and shows no signs of relinquishing its position anytime soon.

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