Bitcoin-Only HODL Strategies Are More Profitable Than Altcoins In The Long Run, A Report Shows

Altcoins provide a wide range of unique features, advancing technology, and potentially profitable investment alternatives.

Specific altcoins frequently record significant gains that outperform Bitcoin during the period known as the altcoin season. However, a long-term examination by K33 Research reveals that a "Bitcoin only" investment strategy has outperformed a portfolio of alternative cryptocurrencies.

Since its inception in 2013, Bitcoin has experienced three successive bull and down market cycles, with the most recent one occurring in 2021. Following the cycle's high, Bitcoin's price soared in a parabolic fashion in a very brief period of time, often a few months.

BTC experienced a peak in 2013 at about $1,175 and then experienced a two-year downturn. The altcoin market was just getting started at the moment. There were few exchanges for fiat to cryptocurrency conversions, and there were few fiat onramps to Bitcoin.

However, a number of alternative currencies, including the creation of Ethereum, had emerged by the end of 2015. A few exchanges that permitted converting Bitcoin to other cryptocurrencies have also been supported, opening the door for an altcoin market.

A bullish run in cryptocurrencies didn't begin until April 2017, when Bitcoin's price crossed above the 2013 peak. As several tokens beat Bitcoin until January 2018, the second half of 2017 saw an ICO boom on Ethereum and retail investment enthusiasm around Ripple's XRP.

Nevertheless, cryptocurrencies had considerably greater losses than Bitcoin in the wake of the bull market. It was argued that altcoin price increases were mostly caused by people purchasing them in anticipation of rising Bitcoin prices.

According to the market capitalization chart for Bitcoin and other cryptocurrencies, Bitcoin found support at $6,500 in the 2018–2019 bear market, having risen from a low of $3,250 in late 2018.

Source: TradingView

K33 Research calculated the performance of $1 invested in each of the 1,009 altcoins that joined the race since 2015 and compared them to $1 invested in Bitcoin at the same time.

The value of the altcoin portfolio today would be around $7,000 as opposed to $50,000 from the Bitcoin-only strategy. Similar to Compound (COMP) and Thorchain (RUNE), many DeFi tokens that were prevalent in the market in 2020 have disappeared from the top cryptocurrencies list as a result of the fall in DeFi usage and, consequently, the desire for holding non-yielding governance tokens.

Due to the legislative uncertainty that surrounds the majority of tokens, altcoins are also susceptible to volatility and regulatory changes. Different cryptocurrencies may go through their distinct seasons at various periods, and the length of an altcoin season can vary greatly, necessitating precise timing on the side of investors to turn a profit.

According to K33 researchers, more than two-thirds of the 1,009 cryptocurrency projects that managed to get into the top 100 by market valuation have stopped operating since 2015. Only 9.11% of these alternative coins produced profits, with only 1.5% exceeding Bitcoin's 50X returns.

According to the report, only two times since 2015 have altcoin investments been profitable: in 2017 when Ethereum (ETH) and XRP outperformed the market, giving the altcoin strategy a significant advantage, and in 2021 when the value of the altcoin portfolio briefly approached that of Bitcoin due to the hype surrounding Dogecoin (DOGE) and Shiba Inu (SHIB).

Notably, cryptocurrencies, with the exception of ETH, recorded comparatively subpar increases throughout the second half of 2021, when Bitcoin reclaimed the $60,000 level from March 2023 to establish new all-time highs at $69,000.