Cryptocurrencies are generally having a hard time staying afloat in the market as the pessimism from governments and traditional financial institutions start taking a toll on the industry. On March 29, Bitcoin was trading down at $7,579, Ethereum was down $417, Ripple was down $0.55, Litecoin was down $122.26, and Bitcoin Cash was down $782. In the year-to-date period alone, the NYSE Bitcoin Index is down 45.8%.
Interestingly, the weakness in Bitcoin and other major cryptocurrencies has not succeeded in demotivating people from trading cryptocurrency. All markets have their fair share of boom and bust cycles, and cryptocurrencies are not exempted. In fact, the current weakness in cryptocurrencies is providing some traders that missed the initial boom an opportunity to buy on the dip. More so, many traders are now looking for cryptocurrency trading opportunities among altcoins in the search for the next big thing.
Interestingly, there are more than 1,380 altcoins in the market; some of them have potential to get the attention of the mainstream market in much the same way as Bitcoin, some of them are operating in niche markets, and some of them will never make it out of the ICO zone. This piece provides 4 insights that can help you separate the potential winners from the losers out of the hundreds of altcoins in the market.
- Be cautious of projects with anonymous creators
Nobody really knows the person that created Bitcoin, but the early anonymity was understandable because of the revolutionary concept of cryptocurrency and its initial link with Silk Road. Now, the creators of cryptocurrencies are bold enough to attach their names to their coins and we at least know some of the people working on the Bitcoin Foundation. You should be careful about investing in any altcoin created by faceless anonymous people. If they choose to disappear into thin air, you might never be able to recover your investment or get justice for their fraud.
- Be wary of altcoins that promise guaranteed gains
All forms of investment carry an element of risk and cryptocurrencies are particularly riskier than many traditional investments. Cryptocurrencies are still speculative in nature, you can make a lot of money, and you can lose a substantial part of your investment. Hence, any whitepaper, ad, or marketing pitch guaranteeing gains on investment on any cryptocurrency is obviously lying. Don’t be carried away by the promise of “the next Bitcoin”, you should conduct your due diligence and know the risks before you invest.
- Make sure you are buying substance and not hype
Individuals and companies launching ICOs nowadays are spending a great deal of money on marketing and advertisements. Before you buy any altcoin, you should be sure that the coin has a sustainable functional use in solving a specific problem(s). Anybody can cook up a shiny whitepaper, carefully crafted charts, and throw in a couple of out-of-context statistics for good measure. Your due diligence will help you determine if the cryptocurrency has substance or another well-packaged hype.
- Social media is a decent metric for measuring credibility
When people create websites, whitepapers, and marketing pitch for their altcoins—they are usually in charge of controlling the narrative. Hence, they can easily craft a great story that paints them in good light. However, comments from early investors, users, skeptics, and critics on their social media posts help you measure their honesty and see how well they handle criticism. Of course, social media is often home to lots of trolling activity, but comments on social media posts can provide insights into the credibility of a team, their project, and their altcoin.
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