It's a problem of liquidity...

It's a grisly scene out there today. Red candles everywhere, prices descending rapidly. Bitcoin has taken a tumble, yet the worst performers in the cryptocurrency market today are altcoins.

Why does it seem that on days Bitcoin crashes, altcoins crash even harder?

It's mostly an issue of liquidity. Keep in mind, Bitcoin itself comprises about 40% of the value of the entire cryptocurrency market. It has the greatest liquidity of any crypto-asset, by far. That means the other 60% of the market is all other coins, combined. A coin that has a market cap of a few hundred million dollars, when compared to Bitcoin's current market cap of $140 billion (ouch), is going to have more severe price swings.

There are a few approaches one can take in this situation, depending on your level of day-trading bravery. First, and easiest, is to just not trade at all. This requires simply holding your assets through the storm and hoping for brighter days on the other side. It's tempting to cut losses, but at this point, many recent buyers would not be ahead.

Secondly, accumulate at a discount. $8000 is a natural point of recovery and resistance for Bitcoin. The price tends to hover in this range due to past buying and selling patterns. Having said that, there are a lot of buyers who entered the market around the $5-6000 range, so it's possible that we see the price head back to these lows. What might be better is to accumulate altcoins that have been hammered today due to their lower liquidity. Search around for your preferred currencies and do your own research. A few that stand out to me today are GVT, VTC, ARK, RDD, and NANO, but there are plenty of other good candidates.

Whatever you do, now is not the ideal time to sell, as tempting as it may be to get rid of assets that feel like they're dragging you down. It might be best to just walk away from your exchange trading for the day and come back in a little while. Wait for the dust to settle from news that has caused drops such as SEC hearings, Google ad bans, and Wall Street investor FUD. These sorts of events tend to cause an exaggerated reaction that will likely calm in a few days.

*This is not professional trading advice - it's just my opinion!

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BTC: 1FadQUp6PxQcbt1sicLRDE3f7v2kQPpVBq
ETH: 0x3edfc32dd4d8daf4ec31663d7b90911127b35d9f
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