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You can either make it or break it while investing in altcoins. Some may call it a gamble, while others might mark altcoin investment as their sorcerer’s stone. But none can deny that currently, altcoin investment is the hottest fad on the scene. The crypto markets grow exciting and unpredictable each day while the world warms up to the utilities of altcoins and Blockchain.
With investors thronging from all walks of life, it is unsurprising that we find you reading this piece. As beginners, a few handy altcoins tips can help us wade through difficult waters in investing. Read on our 7 most useful altcoin tips for investment to grow your kitty exponentially with time:
#1 Look Before You Leap
However basic this move may sound to you, you cannot jump into any trading or investment arena- whether of stocks or altcoins, without sound knowledge about the market and the coins you want to invest in.
- Crypto markets operate 24×7 and are more volatile than the regular stock markets that are mediated by regulatory authorities, such as the SEBI in India, and deal in pegged financial instruments. You need to understand that crypto markets often witness quickly changing moods. Keeping a tab on the history of the market or performance of a particular altcoin, investor sentiments, current developments in the crypto space, bearish or bullish trends in the market,, and other such parameters can help you understand the ergonomics involved.
- You need not empty your altcoin kitty each time prices rise or vice versa. Go for the coins you believe in, read their whitepaper, check their team and roadmap, the technology they employ, to further back your confidence.
- Next, Having an investment strategy with a clear mission in mind can help you sail through the toughest of times. Think whether you would like to hold the coin for minutes, hours, days, months, or even years. Or whether you want to day trade or ‘bag hold’ the altcoins for the long term.
- Choose a reliable cryptocurrency exchange to trade or transact in altcoins. For instance, WazirX, the most trusted cryptocurrency exchange in India, lets you trade securely in the fastest and easiest way possible. To start trading now, click here.
#2 Avoid Putting All Eggs in One Basket
The crypto sphere is a volatile territory where events such as a slight technical team spat in Tezos or Musk calling out ‘DOGE, DOGE, BABY DOGE’ on Twitter can break or make markets respectively. It would be, therefore, foolish to invest in a single currency. Diversify your investments in multiple altcoins. For beginners, it would be the safest to bet on the top 10 altcoins by market capitalization, besides Bitcoin, such as Dash, ETH, XRP, Litecoin, Cardano, etc.
Bonus altcoin investment tip: Invest in altcoins that are yet to realize their full growth potential to see your investment grow several times as the altcoin gets big with time.
#3 Believe in Fundamentals
Unlike traditional stocks, altcoins are much more than mere financial instruments to be traded. They come with their own set of concrete goals. Some help in mediating the price of currencies, others help accelerate payment transactions, while others strengthen the transparency and accountability of a particular platform, say, smart contract platforms such as Ethereum or NEO, or decentralized storage networks such as Filecoin or Storj. Instead of going for the popular opinion, stick to this two-fold strategy of assessing the fundamentals behind the coin:
- Assess the feasibility, practical application, and scope of the concept behind the altcoin to determine its longevity.
- Analyze the scope and impact of its upcoming partnerships and releases on its market performance.
Bonus altcoin investment tip: Instead of going for coins in different ‘categories’ as discussed above, diversify your portfolio within the category to hedge your risks.
#4 Go Technical, Shun Emotions
Avoid FOMO or any gut, liver, or heart feeling a numbered proof doesn’t back that. Learning a few nuances of technical analysis can help you multiply your crypto investments. You can easily identify whether the price is going upwards or downwards, fluctuate or stagnate, and align your investment strategy accordingly. For instance, if you are aware of the 50-day SMA (Simple Moving Average) for a particular altcoin, you can identify bullish price changes once the price of the altcoin starts moving above its SMA.
Another useful technical indicator can be the ATH(All-Time-High) price of an altcoin. You can evaluate what proportion of the ATH value of the altcoin is relative to its current price. These indicators, if studied regularly before trading, can help make informed trading decisions.
#5 Whether to Stake, Mine or HODL
There can be several ways to build your crypto investments depending on the kind of altcoin you have invested in:
- Hodling cryptocurrencies is the safest, simplest and fastest method to generate passive income from your investments. All you need is to invest in altcoins via a reliable exchange using a safe crypto wallet. You can buy cryptocurrencies in small fractions and slowly increase your holdings.
- Staking is another way to earn passive income on your altcoin investment by freezing or ‘staking’ them on a particular network and earning interest.
- You can also earn dividends regularly via mining altcoins. Cloud mining or joining a mining pool can be feasible options for individuals who want to earn rewards via mining as solo mining is an expensive and difficult affair especially in the case of Bitcoin.
#6 Hedge Your Crypto Investments
Playing smart in the diversification game is the key to hedge your crypto investments. How to do that? Think out of the box to diversify your investments beyond cryptos in stocks, gold, and other conventional instruments to build your portfolio across markets. A combination of stocks and cryptos in your portfolio can help you overcome the high correlation in the crypto market. To put it simply, an upward shift in Bitcoin, which holds 45% of the crypto market share, results in a similar trend in the broader crypto market and vice versa every time. As such, there are no actual ‘safe crypto assets’ on which you can bank upon in case the market crashes. No wonder major investment funds seem to be intent on exploring a combination of the two these days.
#7 Begin Small, Go for Liquidity
Go for a test run before you play the actual innings in the crypto market. Begin with small investments to steadily consolidate your investment portfolio over time. Once you realize you are on the right track, there’s no going slow. Regular trading is another simple trick to keep your investments moving and multiplying.
Liquidity in crypto investments is paramount to play safe and ensure fluidity. Many times, investors go for altcoins with low trading volumes. This move can prove to be a handicap. The altcoin price may increase several times, but you cannot actually sell them to reap the gains. Even if you are able to sell a large number of coins, it is possible that the prices may crash due to zero liquidity. How to play safe then? Avoid low-volume altcoins altogether!
Do comment down below and tell us which one of the above altcoin tips would form a part of your cryptocurrency investment strategy for 2021!
Frequently Asked Questions
Who Invented Cryptocurrency?
Satoshi Nakamoto invented cryptocurrencies and the technology that makes them function in 2009. The presumed pseudonymous individual or persons who invented Bitcoin used this identity. In addition, Nakamoto created the first blockchain database. Even though many people have claimed to be Satoshi Nakamoto, the person's identity remains unknown.
Is Cryptocurrency Safe To Invest In?
Cryptocurrency investments are subject to market risks, but if sufficient security measures are not taken, trading accounts can be maliciously accessed. Investments come with risks and uncertainties, and we cannot claim that any digital currency investment is risk-free. Buying and selling cryptocurrencies can be risky even if the trader is knowledgeable about the market and treats their coins carefully.
Are Cryptocurrencies A Good Investment?
Cryptocurrency has the potential to make you extremely wealthy, and the potential to cause you to lose your money. Crypto assets, like any other investment, come with many risks and potential rewards. Fundamentally, cryptocurrency is an excellent investment, particularly if you want to gain direct exposure to the demand for digital currency.
How To Invest In Cryptocurrency In India?
There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is the process of verifying and adding transactions between users to the blockchain public ledger. Purchasing cryptocurrency in India is a straightforward procedure where investors simply participate by registering with a crypto exchange such as WazirX. After registering for an account, citizens can trade multiple cryptocurrencies, store cryptocurrency in wallets, and more.
How To Invest In Cryptocurrency?
There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is considered the procedure of verifying and adding transactions to the blockchain public ledger. Another option is via cryptocurrency exchanges. Exchanges generate money by collecting transaction fees, but there are alternative websites where you can interact directly with other users who want to trade cryptocurrencies.
Is Cryptocurrency Legal In India?
In India, cryptocurrencies are legal; anyone can purchase, sell, and trade cryptocurrencies. They are currently unregulated; India does not have a regulatory framework in place to regulate its functioning. According to the Ministry of Corporate Affairs (MCA), companies must now declare their crypto trading/investments during the financial year, according to the Ministry of Corporate Affairs (MCA). Cryptocurrency transactions have been taxable in India when people receiving such gains are Indian tax residents or where the crypto is considered to be domiciled in India
Is Pi Cryptocurrency Safe?
Pi Network captured the crypto community’s interest even before it officially debuted. Its innovative mobile mining approach and user-friendly design simplify crypto adoption for a broader audience. Some users see this as a chance to get engaged in the crypto from the beginning and profit in the future, similar to how early Bitcoin adopters made huge profits by mining and keeping the coin. Other users have compared Pi to a worthless multi-level marketing (MLM) scheme.
Which Cryptocurrency Is Best To Invest In 2021?
Many altcoins are flourishing to invest in. Some cryptocurrencies with great potential are Ether, Ripple, Tron, and more. Investors are trying to diversify their portfolios and are flocking to the leading cryptocurrencies. Many growing businesses are already accepting cryptocurrency as acceptable payment methods.
How Cryptocurrency Works?
Cryptocurrencies use cryptography technology to keep transactions and their units (tokens) secure. Cryptocurrency works via a technology called the blockchain. A blockchain is a decentralized technology that handles and records transactions across numerous computers. The security of this technology is part of its value.
Is crypto legal?
Crypto is legal in most countries, including India. While nations like the U.S. and many in Europe have regulatory frameworks, others like China have strict bans.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
