Crypto is going down this weekend and all the hand wringing and name calling (weak hands) won't make it bounce any sooner. The crypto market has had an amazing run over the last few months and this is a healthy breather to retrace the progress we've made.
Don't Panic
At roughly a market cap of $104B, the crypto market is a shade over 5.7 times the size it was on January 1st of this year. As more and more cash flood in to the market, the overall price volatility has also picked up.
Attack of the Clones
Because of our amazing run, the number of new blockchains and dApps have also proliferated. ICO's are getting more and more lucrative for startups and speculators are now seriously outnumbering enthusiasts. Even die hard moonkids of Ethereum and Bitcoin are starting to look around and consider the viability of newer players like Litecoin and Antshares (EON). Aeternity will have a viable product out this year and Tezos should be launching its ICO soon. All in all, this will be a very interesting marketplace with lots of copycats fighting for space.
Sunk Costs
If you sold your Ethereum when it was still in the 300's, great. Give yourself a medal. If you're holding all crypto and no fiat, say it again: Don't Panic. Volatility is a trader's best friend. Tax issues of short term gains aside (and please consult your own tax advisor, not me), whatever you paid for your tokens, whether it be $5 or $2990 is beside the point. What matters is what your crypto assets are worth NOW.
Use Arb-Bots to Your Advantage
Use some detective work and figure out which alt-coins correlate strongly with what you're holding. Make sure it's an actual trading pair. This is crypto and it's not going down without a fight. No one knows where the bottom is but there will be lots of bounces down this steep mountain. Also take note of which tokens do not correlate with what you're holding. They can be used as good counterbalances in the future.
Set a limit order for an alt-coin and assuming when your holdings bounce, there'll be some lag before the alt-coin follows. As the arb bots rush to sell into your limit order, the price will fall and you'll be able to fill at a lower price before the price tethers back to its normal trading range vs BTC or ETH.
Use this strategy to diversify some holdings into clones. Most of them are scams but some of them will be the real deal. You don't want to be "that guy" blindly putting your faith into something else when a different alt-coin starts to moon.
Happy Trading!