What You Need to Know Before Investing In Altcoins
According to statistics, there were 1300 altcoins available in the market as of January 2018. For a beginner or a seasoned investor, you need to follow alt coin news so that you’re always aware of what is happening in the market. You may be thinking there is no way you’d get 1000% returns the way bitcoin investors did. It should be noted that cryptocurrency is not all about bitcoin as there are different coins in the market at the moment. There are more than 1500 cryptocurrencies in the market and the number is set to grow as crypto becomes more mainstream. Before you decide to invest in altcoins, here are some tips that could come in handy.
No Profit Guarantee
This should be made clear from the onset as people get into cryptocurrency for all the wrong reasons. Cryptocurrency is like the Wild West and it gets worse the further down the market you go. This doesn’t mean you can’t make a profit but is always good to manage expectations so that you don’t get disappointed at the end of the day.
Invest What You’re Prepared to Lose
This applicable any kind of investment and altcoin is no exception. You could invest in a project and it ends up being a scam and you end up losing your hard earned cash. You should not invest your life savings as you could potentially lose it all given the volatility of cryptocurrency trading. Whatever you invest should be affordable and should be prepared to lose it all.
Be on the Lookout for FOMO and Coin Pumping
Any kind of quick gain is likely to bring out the greed in people. Greed has the potential of making people very manipulative which can be disastrous in cryptocurrency trading. It is unfortunate that this happens a lot when it comes to cryptocurrency trading. There are coins with no real value that will be pumped upwards just to create the hype. The fear of missing out is always big in cryptocurrency and it understandable given the fact that bitcoin blew out of nowhere. Even though it will not be possible to avoid the “buy rumor” you can choose not to pay any attention. The information consumption should be relevant and factual as much as possible so that you don’t make decisions based on speculations and FOMO.
It is crucial that you do your own due diligence before committing money to the cryptocurrency trade. This will involve doing research on altcoin. The good news there are whitepapers on almost any coin. You should also follow up on the news to analyze market trends which help with the decision making process. Watch out for the red flags by learning how to separate the grain from the chaff.
Keep an Eye on Markets
If cryptocurrency could be described in one word, it would be volatility but that doesn’t mean you shouldn’t be looking at the bigger picture. In most cases, you will be looking at the two main markets: bitcoins and altcoins. It might be traditional wisdom to know that the value of altcoin could go down when bitcoin goes up and vice versa.
There are traders that will use the value from the bitcoin to trade in altcoin. News affecting a coin could also spook the value in either direction. Make sure you’re watching for events so that you’re prepared with the right information for informed decision making.
There is a high chance you can profit from altcoin investment if you’re sensible in your approach.
It is ok to be cynical and question everything. That means that you don’t get carried away easily. You should be mentally be prepared for the rollercoaster that is cryptocurrency trading. If you’re deep into crypto investing, it will be a good idea to try and diversify your portfolio. You don’t want to put all your eggs in one basket given the volatility of the industry.
You should consider the HOLD Approach when investing in altcoins. This will sometime mean holding on to the investment as you might have learned your lessons from making hasty decisions. This approach is meant to wait on volatility and turbulence in the market so you can assess the situation after a couple of months. Not everyone will have the patience to wait for a long time given the volatility of the crypto market. A coin could drop by 30% and increase by 300% after only a couple of months.