The Chain logo

How to Pick an Altcoin

by Caroline Egan 3 months ago in alt coins

( 3 things to research before investing)

How to Pick an Altcoin
Photo by Ibrahim Boran on Unsplash

With thousands of altcoins to choose from it seems that there might be a large opportunity for growth in your portfolio aside from Bitcoin. Shiba Inu was recently launched on Coinbase, to an immense amount of both negative and positive hype, nearly tripling almost instantly, and remaining around that figure. There are several other profitable coins out there on market, but also plenty of duds.

So how can you tell which ones have potential, which are scams, and which may disappear?

The purpose

Most coins have a purpose of some sort. Perhaps they are trying to fill a gap in the market with ‘smart accounts.’ Perhaps they offer sustainable crypto or are concerned with NFTs (Non-fungible tokens) with digital art. Whatever their purpose, you need to identify what it is and whether you feel there is an actual market for it. Are there many other cryptos offering to do this? Is this a trend? Is the market already oversaturated? Do you think it is a useful coin? When you have answered these, you need to examine the company, its size, and reputation and assess whether you believe it has the solutions and means to fulfill those needs.

Impact, Community, and Reach

Online communities can help or break a new currency. Assessing where it lies in the community and whether it’s spoken about is a good indication of its following and future success. Remember that Dogecoin was only ever supposed to have been a ‘joke’ crypto and now is doing relatively well? Well, this was in part due to online forums and community support. Sites like Reddit are excellent for gathering information on public opinion on each coin as well. Also, check out their social media accounts and website to see how much they post and engage with the community. What is their mission statement, and how well planned out is it? Does it seem like they are moving towards their goals effectively? Are they very active? Does the coin seem to have substance? All of these are key indicators that a coin is useful with a loyal following.

Who are their investors?

Look into who the key investors are in the coin. It doesn’t necessarily matter whether these are famous investors. Although that can be a great signal to buy, at least research how strong and experienced, these investors are in crypto. Check out what projects they have worked on previously and what they have succeeded at. Investors that have been involved in well-performing coins or tech companies before adding to the feasibility of a potential investment. However, don’t assume because a celebrity is involved that they know what they are actually talking about. Look at people in the industry and have a history with technology and investments.

Media attention and hype

Elon Musk’s tweets about Bitcoin have resulted in a lot of emotional sell-offs of the currency. Celebrities seem to be very opinionated on the matter, which has impacted the prices of coins, even though they have little experience in trading. Look at large investment companies like JP Morgan, etc., and see if they have recently spoken about them. Cryptocurrency differs in that many investors have no trading experience and are not doing it professionally. Arguably, this does mean that it is a more relatable way of doing business. Still, it also means that a lot of those involved are in no way experts.

Take heed more of financial advisors and companies, bearing in mind the fact that they will likely want to cover their own interests as well. Look at who is investing in what. If possible, find out how much of their portfolio is taken up with specific cryptos.

Public sentiment and trust in a particular currency and its following online can have a massive impact on its public perception and price. Look at the recent trend on Reddit regarding the stock market with Gamestop and AMC and the price increase on those shares purely based on public demand and a focused group mentality.

So be careful, do your research and decide on an acceptable profit.

alt coins

Caroline Egan

Hailing from Dublin, Ireland, Caroline has a variety of published fiction and non-fiction, written in a wry style on all things nerdy and neurotic. Her collection of essays Fahckmylife: The Little Book of Fahck, is available on Amazon.

Read next: Binance Clone App Development

Find us on social media

Miscellaneous links

  • Explore
  • Contact
  • Privacy Policy
  • Terms of Use
  • Support

© 2022 Creatd, Inc. All Rights Reserved.