How to identify a good altcoin to invest in?
What is an altcoin?
The term altcoin means pretty much "any other crypto besides Bitcoin".
These days, of course, when people talking about altcoin they are usually talking about slightly less popular coins with lower trading volume.
Where can you buy altcoins?
You can buy altcoins at any cryptocurrency exchange. But the selection of cryptos offered by each coin vary a lot.
The importance of altcoin research
There are literally thousands of altcoins out there to choose from and new coins are coming to the market all the time.
See here for some new coin listings.
Some of them have great potential, some of them might have some potential, some of them probably have only speculative value.
And you can also come across total scam coins that will lose you money for sure.
Or cryptos that used to be a thing, but are dead by now.
That's the reason why you need to research each coin before actually putting any money into the.
What are the factors when identifying a good altcoin to buy?
There are several things to consider when trying to identify an altcoin with good potential.
Is it easy to find who are working on the crypto? What have the core team members done before? Look for big names, great experience and expertise.
Always check out the project's Twitter and Reddit account (among others). Is there enough following? If there is enough following, are there enough comments (meaning, enough active users)? If there are, are they happy with the project or are they rather unsatisfied?
Does the product already have lots of users?
How many wallets are controlling the majority of the tokens? If the majority of the tokens are controlled by 50-100 wallets, it's bad tokenomics. Also look for regular burns or buybacks, ideally fixed supply and incentives for holders.
What's the idea behind the altcoin? Are they trying to solve a problem? Do they have a unique idea? Do they do something a lot better than others? Does it actually give any additional value to its users?
Coins that simply want to imitate established coins are boring and in most cases not a good investment.
Does company have a very good tech or is the most anyone could say about it is "meh"?
Timing is the key. Very often you find that during certain periods specific types of projects seem to work the best.
And when talking about timing again - you may have found a perfect crypto to invest in, but is it the right time to buy? Look at all time highs and all time lows.
IF you're knowledgeable enough, check the major support and resistance zones.
You did your research, but nothing is guaranteed
Unfortunately, even when you do your research and find the best coins to invest it, nothing in this world is guaranteed.
The crypto team can break, they might have other issues, their product might fail.
There are so many reasons why nothing can be taken for granted.
That's also one of the reasons why it is recommended not to invest more than 5% of your capital in any one coin.
Before adding the next altcoin to your crypto portfolio, make sure to do your research.