12 Altcoins To Buy Down After Recent Crypto Crash, Experts Say

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Bitcoin fell 17% on the first day El Salvador made the cryptocurrency legal tender. The sudden drop triggered more than $ 3 billion in liquidations in 24 hours and spread to altcoins. We interviewed four crypto experts on what is behind the crash and which altcoins are worth buying on the downside.

Bitcoin chose only the day to show its extraordinary volatility.

While the cryptocurrency was officially adopted as the national currency in El Salvador on Tuesday, it fell to $ 43,000 after surpassing $ 52,000 for the first time in three months.

While some traders saw the sudden crash as a “buy the rumor, sell the news” event, others say there are greater forces at play. Obviously, the cascading closeouts of futures contracts leverage are partly to blame.

The fall in prices “seems to come mainly from the trend of high leverage traders” as too many people were anticipating new highs, Lucas Outumuro, head of research at blockchain analytics firm IntoTheBlock, told Insider in an email.

He added that the ratio of perpetual open interest swaps to bitcoin’s market cap had recently reached over 1.55%, an indicator of short-term price corrections.

When traders take a leveraged futures position in the hope of amplifying returns, they have to deposit collateral in their margin account or risk liquidation. The higher the leverage used, the higher the amount of collateral they have to deposit. As a result, sudden price movements could cause traders to quickly fall below margin requirements and be liquidated.

As of Wednesday morning, more than $ 3.25 billion in crypto positions had been liquidated in 24 hours, affecting more than 300,000 traders, according to Bybit, the crypto exchange where traders can still leverage a hundredfold.

Liquidity evaporates in the middle of a perfect storm

As the liquidation stunts moved prices, a mix of factors caused a liquidity shortage that intensified the dramatic intraday moves, according to Patrick Heusser, head of trading at Crypto Finance Brokerage.

“Tuesday we had the perfect storm because you had the long vacation weekend in the US. You had a moving market up, so market makers were noticeably strapped for cash because ‘they had to hedge all their futures which they lost to the leveraged men, “Heusser said. Insider said, adding that these were his personal thoughts. “And then they were probably a little too complacent on Monday, not sending enough capital quickly to their trading venues.”

In such a context, when the market started to fall, market makers ran out of dollars and stablecoins to buy tokens at one point. “If the market continues to go down, you pull out, then the market makers would turn off their machines. They pull out,” he added.

As market makers and liquidity providers ran out of capital to list, crypto exchanges also encountered various operational issues that caused them to go offline temporarily, as is typical in such sudden crashes.

A break for altcoin season and the NFT frenzy

The latest crypto crash came amid a trading frenzy over altcoins and non-fungible tokens, but traders and analysts said it was not catastrophic for the two scorching trends in the 2,000 market. billions of dollars.

“We generally see altcoins hitting historic highs as BTC and ETH pause towards the end of the cycle. I would say this is more of a local high than a cycle top,” Kevin Kang, a founding director of crypto asset hedge fund BKCoin Capital, Insider said in an email. “I expect the market to digest the rapid movement in the next few days, and some of the quality altcoins will continue to rally towards the end of the year.”

But as crypto prices continue to fall, there might be less risk to look for in the short term.

“In some of the NFT markets the bottom hasn’t really moved much. It’s just that the overall dollar has fallen 20% to 30% because the NFT-related coins have come down a lot,” Heusser said. . “In a market like yesterday, no one is in the mood to buy. It isn’t really trading, so the bottom isn’t really changing.”

Altcoins worth buying on the downside

After the elimination of leverage this week, some analysts are predicting more volatility to come.

Joseph Edwards, head of research at Enigma Securities, has been very negative about the outlook for the crypto market for September for some time.

“The bottom line for investors is that there is no middle ground here,” Edwards told Insider in an email. “If you are looking to invest based on potential adoption and partnerships over the next six to 12 months, you may see underperformance both during that time and beyond.”

He believes right now it’s about getting exposure to assets that could become an integral part of crypto in five years, he said, which for the most part means investing heavily in the. bitcoin (BTC) and ethereum (ETH).

When it comes to altcoins, solana (SOL) has by far the strongest pace going forward, while the fantom (FTM) and mina (MINA) protocols are also interesting, he said.

Although mostly long bitcoin, Heusser is also bullish on the Solana ecosystem.

“Drops like what we saw yesterday, where I’m convinced it was one of those wash drops, picking up altcoins is even more valuable than trying to buy the drop for bitcoin,” did he declare.

Aside from solana, Heusser enjoys ftx token (FTT), serum (SRM) and star atlas (ATLAS), a crypto game based on the solana blockchain.

IntoTheBlock’s Outumuro said he thinks it’s probably best for investors to have higher bitcoin allocations until volatility sets in.

“The only altcoins that might continue to perform well in the short term are smart contract platforms with current incentive programs such as avalanche (AVAX), fantom and celo (CELO) as they see increased usage. and a total value unlocked and can follow the path of solana, “he said.

Kang from BKCoin Capital added, “I am thinking in terms of altcoins, smart contract platforms such as solana, terra (LUNA) and cardano (ADA), as well as web 3 tokens and NFTs such as arweave ( AR), axie infinity (AXS) have outperformed bitcoin and ethereum significantly this year and will continue to do so for the foreseeable future. “

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