The analytics firm 10x Research has described the approach by which it selects altcoins with the greatest potential to outperform Bitcoin (BTC). The method is based on a bet on the strength of the price trend and a strict risk management system rather than long-term holding of assets.

According to the company, over the past decade only Bitcoin and Ethereum (ETH) have steadily held the top two spots on the market. The positions below them have constantly changed, and it is precisely this conclusion that 10x Research places at the heart of its altcoin strategy.

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Why long-term holding loses out to following the trend

The main thesis of 10x Research is that the constant change of leaders below the top two makes long-term holding of altcoins a risky strategy. A coin that is among the strongest today may drop out of the top rankings within a year, and a passive holder risks being left with a depreciated asset.

Instead, the company proposes following the strength of the trend. A bullish view on a coin is justified as long as it trades above key moving averages. This is a signal that the asset retains its upward momentum and buyer interest.

As soon as a coin falls below the six-month or twelve-month moving average, under the 10x Research methodology it is time to decisively reduce the position. This mechanical approach removes emotion and attachment to a particular asset from the decision, forcing one to follow the real price dynamics.

A double filter: catalysts and risk

The selection of altcoins is built on two criteria simultaneously. The first is the search for powerful individual catalysts, that is, events or factors capable of moving a specific asset independently of the overall market.

Source: BeInCrypto