In the world of crypto bitcoin is known and given the nickname as the mother of crypto. From the creation of bitcoin as the first crypto coin that was created with source code that was provided free of charge to be developed, then new coins were created that followed a systematic and new code system as well. From here then the coins in the term Altcoin or a collection of coins other than bitcoin.
Along the way, bitcoin and altcoins finally have their own market called the cryptocurrency market, which is now getting more and more choices and types on offer. In terms of the movement or upheaval of crypto prices in the market, various kinds of terms were born, one of which is known as the Altcoin index.
Altcoin index is a collection of indices that contain views of fluctuations that occur in the cryptocurrency market against fiat currencies. Where this Altcoin index aims to be able to help traders or investors who enter the crypto world to be able to predict the direction of crypto asset prices in the future.
The word Index is a mathematical expression of the calculation of the ratio of two objects. Thus, the Altcoin Index can provide an idea of the capitalization of all cryptocurrencies with fiat currencies. And regarding the most frequently encountered pair is ALT with USD.
As we know, altcoins are cryptocurrencies other than bitcoin or alternatively bitcoin. So from here, the market capitalization of altcoins is quite representative of the general crypto market situation.
The Altcoin index instrument appeared in 2017 in response to the growing public interest in the cryptocurrency market. And in the same period, Bitcoin also experienced a fairly large increase.
After experiencing skyrocketing popularity in 2017, cryptocurrencies have experienced such a drastic decline that they have reached a third of their market cap. And Altcoins also experienced a drastic correction where at 5000 to 1700, but then slowly finally stabilized, at the beginning of July, where the Altcoin Index was in the range of 4,300.
Based on the main purpose of the Altcoin Index, which is expected to be used as an instrument for traders to be able to monitor the current situation of the ongoing crypto market. So that traders can predict the trend of the crypto market which we know is very volatile.
In line with its development, we also find a lot of Altcoin Index on a crypto exchange platform based on contracts with options (options).
Where in the scheme, a trader still needs the price movement of crypto assets in the future. Because, every price prediction path really determines the value of the option contract that the trader chooses at the beginning.
Altcoin Index is useful for Prediction, Not for Speculation, so we must know that Altcoin Index is not an instrument created to help traders speculate, once again it is said this is for prediction. Because, it is clear that this index only reflects the actual situation in the crypto market, not as a means of knowing about speculative prices,
So this fact is quite important, especially for traders to examine the price of crypto assets that will occur in the long term. So don't be misunderstood and make other traders misguided or misinterpret in using the index.
One thing that can be used as an example is the market conditions in January 2019, the Altcoin Index used to crawl up. From there, it is indicated that the condition of the altcoin market capitalization is rising, which can be interpreted as a reflection of the high demand for cryptocurrencies that is happening. But in the same period, we know that the exchange rate of Bitcoin and other cryptocurrencies does not see much change on the exchange platform.
From the market conditions that have occurred, it can be said that the possibility of such demand is fairly ephemeral. Due to the probability of "fake" demand it will make the price of crypto assets fall and can fall freely. Traders who understand will certainly realize this.
Altcoin Index which can be said to be a mathematical expression where the value only consists of data in the form of numbers. This is very useful for traders, they can use the Altcoin Index to be able to read the actual market conditions and also be able to distinguish noise data.
A false report or rumors whose origins are unclear can shake the price of one of the crypto assets.
And it can create panic in the market (Fear, Uncertainty, and Doubt/FUD). In fact, it can trigger traders to sell, thereby making altcoin prices decline.
This kind of panic can indeed hit traders. They may also be influenced to release their crypto assets and exit the market. But there is one advantage, where they can minimize that worry by reading or viewing the Altcoin Index.
If an Altcoin Index value only changes in the range of a few hundred points after the panic, it can mean that the altcoin market is not entering a dangerous level. It can also be said that market conditions are considered stable.
Here we are required to think critically. It could be, the concern is caused by the actions of crypto asset dealers (whales) who are deliberately playing the price of a certain crypto asset.
The rate of growth or a decline in the Altcoin Index is a signal that serious changes in the altcoin market are about to occur. From this information it is quite important for traders who carry out direct trading or options contracts.
So from this, we can take something that armed with the Altcoin Index, as a trader must be able to equip himself with a comprehensive fundamental analysis. In order to be able or know to predict where the price of crypto assets will go in the future.
