Almost everyone who got acquainted with the world of cryptocurrency, started with Bitcoin . At the same time, every day more and more traders and investors pay attention to altcoins . Many of them are beginning to show independent growth dynamics, which is less related to bitcoin pricing schedules. Using altcoins, traders can earn much faster, but the risks in this case are much higher .
Altcoin investments are different from working with Bitcoin, so three key strategies for investing and trading them are described below . If we compare the annual price charts of the first cryptocurrency of the world and the rest, it becomes obvious that Bitcoin behaves less chaotically, and accordingly remains a more reliable tool for investing. Although this does not mean at all that it is not worth investing in “alts”, all the more so since it is already possible to determine those coins that are very stable in their behavior during the general negative trend in the market.
Purchase of altcoins at the pre-ICO and ICO stages . It is obvious that at this stage there will be an opportunity to pay the lowest price for the coin. Given the fact that the number of ICOs is still quite high, there is no doubt about this.
After the coin enters the open market through listings of top exchanges, one can observe a natural increase in the price of these tokens. Earlier, at this stage, the cost increased by 2-3 times or more. Now you can count on a profit of 50% or more, depending on the particular coin.
With a less strong surge, you can either wait, there are positive signs of growth, or put up for sale with a lower margin.
This way of working with altcoins is great for those who work with several ICOs at once. It is very important to understand that it is impossible to invest in all ICOs in a row. Before acquiring any tokens, you must carefully study the company, the product, who belongs to the team, what is implemented at the moment and what goals are spelled out in the whitepaper. Given all these factors, it is possible to more clearly understand how promising this or that moment. Also important is the size of the community, which at this stage has already gathered around the project and the hype at the stage of the ICO. The more activity, the greater the likelihood that the token will show excellent growth when entering the open market. A separate advantage is the restriction in the purchase of tokens at the ICO stage. If there is a minimum entry threshold or other conditions,
If there are doubts about a specific ICO, but there remains an interest in these projects, you can always wait for these tokens to enter the open market. This minimizes the risks related to the successful completion of the ICO and which exchanges will enable to trade this altcoin.
Buying coins after fresh ICO is not immediately. As a rule, after a large spike in value as soon as it appears in listings, after a short period of time, the price plummets. This is a natural phenomenon due to the fact that many investors who invested at the stage of the ICO itself, fix their profits. Just waiting for such a fall, you can buy coins at a price close to the one that was before entering the open market and earn enough quickly during the reverse growth of the coin.
As in the previous strategy, it is very important to pay attention to the projects and analyze them. It is not uncommon for a project to undergo an ICO; when entering the market, there is a regular surge in price, but it does not come back after a recession for various reasons. Often, because the technology does not meet expectations, or the implementation of the stages voiced in WhitePaper does not go through properly.
You can also count on profit by owning altcoins who are experiencing their first surge and fall. In this case, you need to constantly analyze the performance graphs and fix moments as the price moves in relation to various indicators.
Of the key things that traders do in this case: tracking the “candles” on the chart and monitoring activity volumes. These indicators will help to form an understanding of what stage altcoin is in, rising or falling. Another important factor is to make a comparative analysis of market capitalization with other similar coins. This will make it possible to determine altcoin overvalued or vice versa.
This strategy is considered the most optimal. The main advantage is that in addition to assessing the conditions of the asset, its direction is also determined, which gives an undoubted advantage. It is fair to note that this approach is the most difficult. But, precisely because of deep analysis and high intensity, traders and investors receive a bonus in the form of reduced risks.
Which strategy to choose, everyone decides for himself. Many try each one individually and stop at those approaches that are as close and comfortable as possible. Regardless of which approach to choose, it is always important to remember about diversification, as well as the fact that over time, the results of different strategies may change. That is why more experienced traders check other strategies with a certain frequency to see if something has changed there. So, a year ago, when there was a clear ICO boom and the most common approach was to purchase tokens before entering the open market with their subsequent sale. Nowadays, preferences have shifted towards the third strategy and fewer and less investors are trying to get tokens at the ICO stage at any cost.