Maximizing Altcoin Investing: Three Strategies
Altcoins can either be huge successes or total money drains depending on your strategy.
The introduction to the cryptocurrency world is always Bitcoin, but as investors get to know the place the draw of altcoins gets bigger and bigger. A quick buck is always on the cards but so is a total bust.
Many think that Bitcoin is volatile, yet it has nothing on some of the moves, both up and down of some of the altcoins out there. To this end, there is money to be made but it is a different ball game and a different tact is required.
There are a few strategies that can be employed when it comes to altcoin investing that are very different to Bitcoin investing, but these can also help you see massive paydays.
First, the market
From the graph below, it is quite clear to see firstly why Bitcoin is still the king of easy and seemingly guaranteed returns. And secondly, it also shows just how erratic and chaotic the altcoin market is.
Image Credit: Woodbull
The orange line represents Bitcoin while the mass of blue and green is the altcoin market which is clearly a difficult mess to master. However, a few choice strategies can be helpful.
Invest in an altcoin while it is still in its ICO phase. This will guarantee the cheapest possible coin. While ICOs are literally a dime a dozen, if you are venturing into the murky world of altcoin investing the ICO phase is the best start.
Coins literally only have one way to go, and that is up, after the ICO but they can also tumble very quickly and fall to zero. As the coin hits the market though, it can spike and that is your cue to sell. In this way, you can easily profit between 100 and 300 percent.
If there is no immediate spike, aim to get between 50 and 100 percent return before selling.
This strategy works well if you hedge your bets and buy into a few ICOs, don't put all your money into one basket/ICO.
You can also hold out for a coin to hit the market and avoid the ICOmania. Look for a coin that hits its first dip on the market and take aim at buying; this can even lead to a cheaper buy than the ICO sale price.
The reason a lot of these coins dip when they hit exchanges is because presale buyers and those that received free coins for helping market the ICO are dumping coins on the market.
Do be aware though because this dumping can skew the market cap of the company.
Holding on a little longer can also be beneficial as you watch the new altcoin go through its first spike and dip. Analyze the charts and see how it starts to move against chart indicators such as MACD, Signal and basic technical charting.
This is a more complicated and intensive strategy but also a lot less risky.
Keep an eye on candle patterns, as well as the volume, to see if it is falling or rising. You can also continuously compare the market cap to other similar coins to see if it is over or undervalued.
This method is much more of an intelligent feel strategy; you are assessing the conditions of an asset and determining its direction. It also goes hand in hand with the saying: “Buy the rumor, sell the news.”