Many BTC traders also kid themselves and get wrecked.
For sure, especially newbees. The key is to learn the importance of hodl, and to understand that short term vol does not conflict with a long term trend.
Alts allow lower investment to be offset by higher risk/reward. But you don't buy just one, that is your inner BTC maxi leading you astray. You buy a bunch of them and use the weighting for the overall performance. I have had some alts double, one go 5x, some do bugger all so overall my weighted bag is 60% ahead of my BTC/ETH performance.
Yes, obviously the capacity of any lower market capped alt to increase is greater than a large cap. I can create an alt for $1, sell it for $10 and make a 1000% gain. Harder to do with a trillion dollar market capped stock. Hence the appeal of alts to some. Which is all good on the way up, and which is why a basket of "leading alts" will likely outperform ETH on the way up, and why ETH in turn will outperform BTC on the way up, with BTC being the centre of gravity around which all alts float.
The key is to know when things are going up (or down), as the same reverse happens to alts on in an overall decline. And so this is the crux of the issue - people kid themselves in thinking that they can predict market cycles. (Basic game theory that half the people, on average must be on the wrong side of this bet). So unless they are fortunate enough to sell, all those "big gains" in alts evaporate on a decline as money moves into safe haven BTC. If you can do this successfully, great. But reality is that over time, very few people (even very sophisticated investors) can do it long term. And hence, usually lessons are learned every big downward cycle adjustment.
There are of course a few tactics you can deploy to help reduce downside risk - for example always jeep a balance of 10 alt / 20 / Eth / 70 BTC and then rotated in and out, depending on these rations going up or down. I would also urge anyone thinking they can outperform with alts to truly track their alt portfolio against both a theoretical 100% BTC and 100% cash portfolio. Everyone I have challenged to do this since 2017 has eventually come to the same conclusion that they were indeed deluding themselves in how they viewed their longer term trading performance in alts. It's well worth doing as an exercise, if only to keep yourself honest to yourself! That is not to say that its not fun trading alts. Its certainly more exciting to see more vol, and so if you get a pleasure from that, that in itself is something of value (much like betting on horses, despite knowing that in the long run its a losing proposition).
