It’s no longer a question of whether you should invest in crypto or not. The debate is now around whether you should be buying Bitcoin, Ethereum, or other altcoins . An altcoin is considered any cryptocurrency / crypto token other than Bitcoin.
In 2017, altcoins were all the rage. It all started with the concept of an ICO (Initial Coin Offering). Basically, companies were creating new cryptocurrencies out of thin air. Most companies had nothing but a white paper, and these cryptocurrencies were being speculated on like crazy. There were no fundamentals to support the market cap of these cryptocurrencies increasing from under $5 Billion to over $360 Billion as shown in the image below.
It came as no surprise when the bubble eventually popped and the market cap then dropped by 90%. A lot of these cryptocurrencies crashed and have yet to recover. I can’t tell you how many crypto investors have regret in playing these coins and wish they would have just stuck to Bitcoin and Ethereum.
What does that mean for you? Well it completely depends on your own personal situation. Is there money to be made in these alt coins? 100% yes! It’s possible to win big as well as to lose big. Buying these altcoins requires a lot more attention. It’s not like Bitcoin where you buy and hodl forever. So you have to decide what type of investor you are. Do you want crypto to consume your life and stare at charts all the time and not get any real work down, then sure, trade these small coins.
There’s a way to be smart about this. As long as 80-90% of your crypto portfolio remains in Bitcoin and Ethereum, there’s no real harm in trying to hit a home run with these more speculative coins.
So what coins should you consider? Anything on Coinbase is solid. It has either been around for a while or has proven early on to be very legitimate. To be more specific, I recommend taking the time to learn more about DeFi (decentralized finance) and the currencies that fit under that category. Check out the blue chip DeFi coins like Uniswap, Compound Finance, AAVE, Kyber Network, and Curve.
Lastly, check out the Cryptocurrency Market Cap Dominance chart below. When the orange line trends up, that means you only want to be in Bitcoin. When it trends down, you want to be in the alt coins. It’s not totally clear to me one way or the other as to what will happen from here.
To conclude, I just want to make you aware of the risks associated with experimenting with cryptocurrencies outside of the Bitcoin and Ethereum. There’s still plenty of upside opportunity with Bitcoin and Ethereum with a lot lower risk. I’ve been reading the book ‘The Psychology of Money’ and they talk about the concept of making money vs. keeping money. The altcoins may enable you to make money, but it can be very difficult to keep that money.
If you have any specific questions about altcoins and anything related to cryptocurrencies, send me an email at email@example.com.
Also, I’ve recently made my first class available for $200 for those that want to test the waters before committing to the whole course. There’s no pressure to continue, it just puts the pressure on me to prove the value of the course.