The explosive rise of Bitcoin has spurred another unprecedented phenomenon—the creation of an army of altcoins that now contest with Bitcoin. There are now a total of 1,519 cryptocurrencies listed on CoinMarketCap, and Bitcoin’s dominance has fallen to below 40 procent from more than 90 procent a duo of years ago. So, how to pick the best altcoins to trade?
This is not to say that Bitcoin is any danger of being eclipsed by other coins, rather it means that traders and investors have a much thicker basket to choose from that wasgoed the case two or three years ago.
That’s hardly a bad thing, considering that altcoins have sometimes bot known to outperform Bitcoin by a country mile. Had you invested $1,000 te Bitcoin ter 2018, investing just $100 for each of the top Ten altcoins and holding onto them for a year, the gains on your altcoin basket would have bot more than dual.
Individual vertoning by altcoins such spil NEM and DASH were even more awesome, with the former netting more than five times the terugwedstrijd of Bitcoin.
Not everybody is interested te holding cryptos for months or years. After all, many people still do not view BTC and other cryptos spil a real store of value. Sway/position traders, however, might find this dude’s diversified portfolio on Hackernoon worthy of consideration.
Are altcoins generally more profitable to trade than Bitcoin?
The brief reaction is, no, at least not for day traders. Understanding chart patterns and good timing are more significant factors for day traders. Day traders are mostly interested te two aspects when choosing good stocks/assets/commodities to trade:
Almost all cryptocurrencies typically exhibit very high absolute volatilities compared to your average stock, including penny stocks. Bitcoin is by far the most expensive cryptocurrency, but still exhibits much higher volatility than many lower-priced altcoins. Medium.com, a popular tech webpagina, conducted a examine to assess the beta values of Bitcoin and leading altcoins overheen a period of 60 days ending October 7, 2018. Bitcoin wasgoed assigned a beta value of 1, since most altcoins are sold or bought using Bitcoin (te any case, many exchanges only permit cryptocurrency trading and not USD or another fiat). You can see from the chart below that many altcoins had lower volatility than Bitcoin while two-month comes back seem to bear little correlation with volatility.
Those jummy comes back are excellent for any position trader, but it might not mean much to a day trader. Nevertheless, here is some advice for both camps of traders.
Knowing the right coins to trade is half of the battle when it comes to profiting from the market. This is even more critical for position/sway traders who project to hold for months or even years (a lotsbestemming of top 100 coins are little more than vaporware).
Here’s how to go about it:
Whether you are a day trader or a long-term investor, you will need to select several crypto coins for your portfolio. Albeit you can add or liquidate individual coins from your portfolio according to your strategy, you are not likely to be doing this on a daily poot. You therefore need to pick coins that have a strong technology backing them, so spil to be sure that they will not go up te smoke. There are literally hundreds of deceased coins listed on the deadcoins.com webstek (I bet you are not aware that a coin by the name boring coin everzwijn existed).
Also bear ter mind that a few coins disappeared into skinny air during the Jan/Feb 2018 market crash, so that’s a very real risk right there. Altcoins that have bot invented to disrupt industries are a good pick, tho’ by no means foolproof. Examples include:
- VeChain (VEN) — based on an RFID suggesting that detects counterfeit goods
- Icon (ICX) — provides blockchain solutions to hospitals, banks, and universities
- Genesis Vision (GVT) — a decentralized toneel that is designed to bring traders, brokers, and exchanges together
- Ox(ZRX) — a protocol that facilitates exchange of token that run on the Ethereum blockchain.
- Cautiously vettig the vendor
- Check out the webstek and look out for the crimson flags
- How strong is the team behind the coin? A strong technical team is more likely to create a sturdy code than a feeble one.
- Are you amazed with the whitepaper? The whitepaper tells you what problem(s) the technology aims to solve and how it goes about it. DO NOT skip this step.
- Get to know the founders. Comb through their social media feeds to get a feel for their individual mindsets.
- Check out the community of existing users on Reddit, Telegram, Instagram, GitHub, and 4Chan. How do they feel about the coin and its future potential? Wisdom of the masses still works.
- Check trade volumes
You can check out a coin’s trade volumes on CoinMarketCap. Trade volume tells you how much has bot transacted overheen the past 24 hours and gives slew of clues about request and future direction. Some smaller altcoins such spil MonaCoin sometimes have larger trade volumes than larger coins such spil Neo and Dash. You don’t want to buy a coin that no one will want to buy when you need to sell.
If you embark with a $1,000 investment, trade every day and make a 1 procent build up consistently Vanaf DAY, your investment will be worth $37,783 at the end of the very first year and a cool $1,427,587 by the end of year two! Te fact, a 1 procent build up every hour is achievable with your average coin if you master the right patterns and indicators.
Always investigate the historical trends and accomplished reviews of the altcoin before buying. This is especially critical for coins that do not have tons of followers or where useful information is hard to come by.
Many traders spend hours on end fine-tuning their entry strategies, but then end up messing everything by taking bad exits. Others lack any effective uitgang project and end up getting shaken out at a terrible price. All cryptocoins have a market cap and a finite coin supply of which a certain percentage has already bot mined. Use those to set up a realistic uitgang.
Consider your individual risk profile when setting your trade strategies, entry, and uitgang points. Never trade more than you can afford to lose is an overused maxim te trading, yet it remains one of the wisest. Learn when to trade and when not to.
With the right strategies te place, it’s possible to waterput ter just a few hours’ work every day and still make good money trading Bitcoin and altstem coins. You just have to know how to pick the best altcoins to trade . Have realistic expectations, stick to the basics and recall to pay your taxes just te case the IRS one day determines to look at your past trading activities!