The current trend in the crypto market has seen investors reassessing their positions in digital assets such as bitcoin. As the market had boomed and the infamous altcoin season had blossomed, a lot of investors had flocked to smaller cap altcoins for some large gains. However, with these digital assets now in a decline, investors have had to find ‘safer’ alternatives which have brought them right back into the arms of larger caps like bitcoin.
Like with any declining market, small caps have borne the brunt of the losses. They have underperformed the other indexes by a large margin. Thus, making it imperative for investors to get out of these smaller cap coins and into other indexes that provide safe havens for the time being.
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The small caps had been the best performers during the bull rally, all through to major market recoveries. They are often the first point of contact for investors who are looking to make large gains in a short amount of time. However, their tendency to grow very quickly also make them susceptible to large drops in prices, which is what the market is seeing now.
Small Caps Index record the most losses | Source: Arcane Research
The performance of the small caps index has been nothing to write home about as it has returned -46% in the losses for investors. It is almost half of where they were trading at the start of the year, making it a consistently bad performer throughout the first quarter of 2022.
Since small caps are no longer able to return the massive gains that have been pulling investors to them, the alternatives now remain the larger cap coins that have held up in the market. Most notable of these have been the pioneer cryptocurrency Bitcoin which has been one of the best performers of all of the indexes.
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Bitcoin, although also returning losses, has held up quite well. With only a 20% decline since the start of the year, it is one of the best performing indexes. Only following behind the exchange tokens lead the pack with only a 14% loss from where it was trading at the start of the year.
BTC maintains support level | Source: BTCUSD on TradingView.com
For comparison, the DeFi tokens have been performing almost as badly as the small cap index, down 45% since the start of the year. Following this is the mid cap index with 33% in losses since the beginning of 2022.
The large cap index has also been closely following the mid cap with 32% in losses by the close of the first quarter. Privacy tokens have fared better in this regard as they themselves have seen a 31% decline also.
These losses in all the other indexes have prompted investors to begin moving back into bitcoin. This way, they are able to mitigate their losses while they wait for the market to recover.
Featured image from Forbes, charts from Arcane Research and TradingView.com