Who can outrun Bitcoin? Analysis and summary of the exchange rate trends of 350 altcoins against BTC

Author: Bill Qian, Bonan Yuan

Background

Recently, the market capitalization of BTC has reached a two-year high, prompting us to analyze the exchange rates of altcoins against BTC. First, let's observe the historical candlestick trends of some mainstream coins against BTC.

Below are the exchange rates of some mainstream coins against BTC over the past years from TradingView.

• LTC/BTC

• BCH/BTC

• ADA/BTC

• ETH/BTC

From the charts above, we find that even the best-performing tokens like ETH only reached their historical highest exchange rate against BTC about two years after their launch in 2017, and since then, the ETH/BTC exchange rate has not surpassed its previous high.

Therefore, we decided to broaden the scope of our analysis: to analyze the historical exchange rate changes of all altcoins against BTC.

Method

• Select the top 500 coins by market capitalization from CoinMarketCap
• Obtain weekly prices of these tokens from gate.io (Gate has the longest historical prices for most tokens)
• Identify the all-time highest exchange rates and dates for all tokens relative to BTC
• Calculate the time from the trading start date to the date of the highest BTC exchange rate
• Calculate the time from the lowest BTC exchange rate to the current date
• Calculate today's exchange rate / all-time highest point
• This method has been open-sourced on GitHub (link at the end)
• No complex statistics were involved. In the future, we can adopt more statistical models for analysis.

Findings

Final range of tokens analyzed

Some of the top 500 tokens were not traded on Gate.io, and we excluded tokens with trading times < 1 year. In the end, we analyzed about 350 tokens, covering most mainstream tokens.

Indicators

• Exclude tokens with trading times < 1 year
• Use weekly high prices of altcoins and Bitcoin to calculate exchange rates

When do the historical highest prices (All-Time-High, ATH) of altcoins against BTC usually occur?

• The Y-axis represents the time span (in years) since the token was issued to reach its historical highest price (ATH).
• The X-axis represents the number of years the token has been traded.

From the chart, we can find the distribution of ATH times.

• Most tokens reach their ATH against BTC within the first year of trading
• Very few tokens reach their ATH two years later
• Let's observe this better with a pie chart

Chart: Distribution of ATH since the trading start date

From the chart above, we can observe:

• Only 5.5% of tokens reached their ATH against BTC two years after their release; the remaining tokens reached their ATH within two years of trading
• To better observe the results, we need to filter out tokens with trading times < 2 years.
• Once we remove tokens with trading times < 2 years, we are left with about 289 tokens.

Chart: Distribution of ATH since the start date, excluding tokens traded for more than 2 years

The results did not change much; only 6.6% of tokens reached their ATH against BTC after two years.

Let's take a closer look at these tokens: ['BNB','DOGE','ETC','FIL','FRAX','FTM','GT','LEO','LINK','MANA','MATIC','OKB','ONE','TFUEL','THETA','TON','TUSD','VET','WAVES']

Among the 19 tokens, some may have been incorrectly included due to Gate's listing delays. The average trading length is 4.82 years, specifically from January 9, 2019, when BTC's trading price was around $3,500, marking the bottom of the last bear market.

When do the historical lowest points (All-Time-LOW, ATL) of altcoins usually occur?

In the previous section, we analyzed when the highest exchange rates of altcoins occurred; now let's explore when the historical lowest exchange rates of altcoins occurred.

Indicators

• Exclude tokens with trading times < 1 year
• Use weekly low prices of altcoins and Bitcoin to calculate exchange rates

This chart is more interesting; it shows that the ATL of altcoin/BTC exchange rates is almost linearly related to trading time, meaning that the longer the trading time, the higher the probability that the exchange rate against BTC is at ATL. Let's find more information through a pie chart!

Since ATL is more meaningful for tokens traded for over 4 years, we only include tokens traded for more than 4 years.

Chart: Distribution of ATL for tokens traded for over 4 years from the current date

Thus, only 18.4% of tokens traded for more than 4 years did not reach their lowest point against BTC in the last cycle. Let's take a closer look at these tokens:

They are ['ADA','DASH','DOGE','ETH','GT','KNC','LINK','LTC','MANA','MKR','SNT','THETA','TRX','VET']. These marked tokens indicate that they did not perform worse than the previous cycle in terms of their exchange rate against BTC. If we remove the two special old tokens ETH and LTC, the remaining tokens have an average trading length of 5.77 years, which was around January 25, 2018, marking the end of the last bear market, with a time difference of about 0.35 between the issuance date and ATL, placing their ATL around June 5, 2018.

Conclusion

• Among the 350 tokens we analyzed, only 19 tokens set new historical highest prices against BTC in the last cycle.
• They are:

1. ['BNB','DOGE','ETC','FIL','FRAX','FTM','GT','LEO','LINK','MANA','MATIC','OKB','ONE','TFUEL','THETA','TON','TUSD','VET','WAVES']
2. They were approximately at the bottom of the last bear market in March 2019.

• In the last cycle, only 14 tokens among the 350 did not create new ATL against BTC:
• They are:
• ['ADA','DASH','DOGE','ETH','GT','KNC','LINK','LTC','MANA','MKR','SNT','THETA','TRX','VET'].
• They were launched at the end of the last bull market and reached their historical lowest prices about 4 months later, at the start of the last bear market.
• The only overlap is:
• ['DOGE', 'GT', 'LINK', 'MANA', 'THETA', 'VET']
• Therefore, bottom fishing is highly risky and is unlikely to yield the highest returns.
• Try to avoid purchasing secondary market tokens that were launched during the last bull market!

1. Most of them will continue to create historical lowest prices.
2. Some tokens will see their historical lowest exchange rates against BTC within a few months, then rebound in the next cycle. However, such rebounds are not significant.

• Only tokens launched during major bear markets can create new ATH against BTC, not even ETH.
• Sell all tokens within 2 years after their launch, and gradually convert them to BTC during bear markets, as only 6% of tokens can create new ATH against BTC in the next cycle, which is stronger than the previous cycle!

Ref

https://github.com/Astrapolis-peasant/ath_btc_exchange_rates/blob/main/price_analysis_gate.ipynb