We start to see a pattern now forming more and more. I have found, in my previous research, a pretty positive correlation between altcoins and BTC. I think I have posted it here on Steemit but I don't remember which article (hey I have 3,481 posts, hard to keep track of all of it).

It basically goes like this, I think there was a 70-85% correlation between BTC and altcoin price, so basically:

• When BTC/USD goes up, then XXX/BTC altcoin goes up too in >70% of the cases
• When BTC/USD goes up, then XXX/USD altcoin goes up too in >70% of the cases

And similarily it goes down. So this supports my new theory that BTC acts as a gateway to the crypto world, given that most new investors that buy with fiat, buy BTC first, then probably secure it on a hardware wallet and only then they start diving into the altcoins.

So this supports my theory that the altcoins are theoretically derivatives of BTC instead of separate currencies. Think about it, they are all 85% dependent on the value of BTC, and they more ore less use the blockchain of BTC either directly like OMNI or Counterparty, or indirectly, by funneling money through BTC into themselves.

The only currency that looks sovereign is ETH, but even here the correlation is strong ,although it starts to diminish, it looks like ETH is becoming independent with more and more big players joining recently. Although even here, when the price starts to crash, it usually goes down across the spectrum.

Most of the time BTC acts as a safe haven during a crash, since money is funneled back into USD or EUR or CNY or JPY. Therefore the % loss for people who hold BTC is always less than those that hold other altcoins (damn I made big drawdowns with some altcoins).

So if you were holding things like DASH or Monero in the last crash, you lost a lot of % points, meanwhile BTC usually does 7-15% corrections.

Strategy

Clearly it looks like the most sensible thing during a crash is to move back money into fiat. It is a bigger market, and has a much more stable price, even if we hate it, it's still safe from a volatility standpoint (but not from bail-ins or from civil asset forfeiture).

But of course not all people are really eager to move all of their money, safely stored in a hardware wallet, back into a centralized exchange, and then into a centralized bank. It just makes no sense, it actually increases your risk, rather than decreasing it. Perhaps the potential trading profits might outweight the risks?

But still the fiat market looks the most "safe" one from a price standpoint. Now if somebody thinks that the risk is not worth taking, and that the safety of the hardware wallet is incomparable to a centralized fiat exchange prone to theft, then that 10% drawdown might be a decent price to pay for that safety.

However there are still ways to gain exposure to the safety of the fiat system, inside the blockchain. It is amazing how many opportunities we have!

Solution

1) Tether

Tether is a cryptocurrency that is pegged to 1 USD, and I believe they have full reserves to maintain the peg. But unfortunately it's centralized, and they have invasive KYC requirements before you can use their centralized online wallet. So it doesn't really look that much different from an exchange or a bank, in fact it can be quite worse, since at least an exchange is generally legally accepted with some regulatory requirements. But Tether looks awfully a lot like Liberty Reserve, and we know how that ended up.

2) SBD

SBD is a sister cryptocurrency to Steem, on the Steem blockchain. SBD is pegged to 1 USD as well, but without a reserve system. The price is solely supported by the traders of the Steem Marketplace and by the Steemit payout system, where you can redeed SBD, or perhaps pay with SBD on Peerhub and other places. So SBD has a full utility as a currency, a controlled supply, despite being a fiat currency. But it's decentralized, it's a decentralized pegging system that helps people store value relative to the USD, which is it's greatest value, meanwhile there is nothing like it that can even come close.

So it's really a no brainer at this point:

• Turn your altcoin into SBD when BTC prices goes down.
• Turn your SBD into else or BTC when BTC price goes up.

You can Get SBD Here:

• BTC->SBD
• ETH->SBD
• STEEM->SBD
• https://blocktrades.us (which is the built-in buy button from the wallet tab)

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Disclaimer: The information provided on this page or blog post might be incorrect, inaccurate or incomplete. I am not responsible if you lose money or other valuables using the information on this page or blog post! This page or blog post is not an investment advice, just my opinion and analysis for educational or entertainment purposes.

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Sources:
https://pixabay.com

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