New Waves Capital, a cryptocurrency investment startup launched in July of this year, has recently claimed “smaller-cap altcoins” have the largest growth potential as, according to it, most investors moved to bitcoin during the bear market, but will put their money on altcoins once the bulls come back.
According to a report published by Yahoo Finance, the firm has noted the cryptocurrency’s bearish trend this year hasn’t seen any customers close their accounts and instead saw many invest even more.
Its CEO, Eric Campbell, noted that those who “would sign up during a downturn have more of a long-term approach to investing.” The crypto ecosystem’s downturn, according to CryptoCompare data, has seen most cryptocurrencies drop significantly from their all-time highs, with some being down over 90%.
Bitcoin, the flagship cryptocurrency, is down about 54% so far this year, while top altcoins like Ethereum’s ether (ETH), XRP, and bitcoin cash (BCH) haven’t been performing as well. These are currently down 74%, 78%, and 82% respectively.
New Wave Capital reportedly focuses on helping “regular folks” invest in cryptocurrencies, not just accredited investors. Its minimum investment option is of $100, and allows investors to gain exposure to 15 cryptocurrencies, including zcash (ZEC), litecoin (LTC), ethereum classic (ETC), 0x (ZRX), and the basic attention token (BAT), as well as top cryptos like BTC and ETH.
The portfolio is rebalanced every quarter, based on a risk survey and an algorithm, Yahoo Finance reports. Currently, given the bear market, it’s weighing the heaviest on BTC, although Campbell is bullish on smaller-cap coins. He was quoted as saying:
The smaller-cap altcoins have the largest potential, we think. In a bear market, everyone moves away from altcoins and they go back to what has been traditionally more resilient, which is bitcoin. They think it’s a safer asset. But when we come back to another bull market in the future, we think people will go back to altcoins.
New Wave Capital’s chief product officer, Albert Cheng, added the hype around the “blockchain without bitcoin” trend is also dying out, as the technology is “difficult to build and it’s quite unnecessary unless there’s some reason for the underlying crypto protocol.” Per his words, if a firm is building a decentralized application for the sake of it, users won’t be interested.
Crypto Market Crash
Moreover, Cheng argued a lot of speculators bought cryptocurrencies at the high of last year’s bull run, and then panic sold their funds when the market crashed this year. Per his words, some believed the price was “going to go up forever,” but once it started coming down they “just dumped it quickly.”
The crypto investment firm, however, notably bets on bitcoin not being the only cryptocurrency making in the long run.
When a market is bearish, there’s a flight to quality, and that’s bitcoin today. But our service is intended to drive long-term thinking. And if people are holding their portfolios for a long time, I think it’s prudent to have exposure to multiple coins. True paradigm shifts take a long time.”
Although it isn’t completely clear why cryptocurrency prices crashed this year, theories abound. Some analysts believe the initial coin offering (ICO) boom saw projects dump raised funds, while others point out retail investors were entering the market out of fear of missing out (FOMO), creating a speculative bubble.
Fundstrat’s Tom Lee, a well-known bitcoin bull, has argued bitcoin futures were to blame for the “gut-wrenching” drop, as his research showed there were dramatic changes in BTC’s price around the expirations of CBOE futures contracts.