Scaling Out of Altcoins: Van de Poppe Warns as Bitcoin Outperforms

There is a need to scale out of altcoins, Michaël van de Poppe says, and in no small part because the assets are at their peaks. The crypto analyst has been making the case for caution in a bullish cycle; even as altcoins put up good numbers in the present bull market, he wants traders to understand that this is not a trend to be taken for granted.

Why Van de Poppe Recommends Caution with Altcoins

“Rational decision making is what is called for,” says van de Poppe, “particularly when you see prices going to new highs.” He advises traders to increase their cash holdings as altcoin prices rise and to watch for any sign of Bitcoin starting to outperform.

Take Chainlink for instance. It reached its peak in 2021 in US dollar terms but did so against Bitcoin in 2020, a year earlier. Van de Poppe sees this as evidence that an altcoin can underperform Bitcoin and that it is unwise to hold on without taking some profit.

Spotting the Signs: When Bitcoin Begins to Outperform

In the altcoin market, one will see vertical movements, or sharp upward moves, and van de Poppe urges traders to watch for them as a sign that Bitcoin is about to take the lead. Demand for altcoins tends to fall off once that happens, and those who have not adjusted their portfolios will be the ones to suffer losses. The prudent course is to put money where it is safer, in cash or in Bitcoin, to offset the risk of a correction.

Managing Portfolio Risk: Increasing Cash Positions

With altcoins at these levels, the risk is elevated. A sensible thing to do is to build up cash in the portfolio as prices rise. That keeps a trader in a position to deal with whatever comes. And should there be a broader correction, say at the turn of the year, van de Poppe intends to put more of his own into Bitcoin. In his estimation, it is the way to protect one’s gains and get ready for the next leg of the cycle.

This article reflects the channel author’s opinion and is not investment advice.