Bitcoin has soared to new highs, but the same cannot be said for altcoins. In fact, many coins are seeing new lows. Meanwhile, Bitcoin dominance has grown to nearly 60% as tracked by CoinMarketCap.com, and continues to gain ground.
Because of this, we are in the middle of one of the most profitable opportunities of our lifetime. Fortunes have been made riding this wave to the top, but the best has yet to come. As Bitcoin continues its rampage, the stage is set for an altcoin explosion like we’ve never seen before. Once Bitcoin Gold breathes its first breaths, trend reversal will send Bitcoin tumbling back toward 40% dominance, and that capital will work its way back into altcoins. You will want to take advantage of this capital outflow, so let’s discuss strategies to ensure you are well positioned to do so.
Before we launch into strategy, let’s first understand altcoins. By definition, an altcoin is any coin that presents an “alternative” to Bitcoin. Every cryptocurrency that is not Bitcoin is an altcoin.
Altcoin investment is very risky. In many cases, by buying altcoins you are in essence reimbursing an investor for his investment in a startup, allowing him/her to lock in a profit. Each ICO (initial coin offering) is met with an incredible amount of exuberance following the initial launch. This creates a massive run-up in the price, but eventually the hype fades away, and so does the value.
After that, the value of the coin will remain low relative to the high for an extended amount of time. During this period, the developers keep their heads down, slaving away on their newly funded project with hope of delivering an awesome final product and more gains for investors. Remember, at this point you are invested in an idea that may or may not come to fruition, not a product. Investors provide means for the developers to hone their idea. Risk is inherent, but the potential reward on the back side is HUGE. That, ladies and gentlemen, is what makes altcoin speculation so attractive.
Pick the Best Altcoins
Altcoin investment is no different than with any other asset. The goal is still to minimize risk and maximize profit. We can do this by avoiding the ‘hype’‘ and ‘lull’ phases and posturing around projects that will improve upon existing technology or offer the community something it needs but doesn’t have. Finding these projections is time consuming, but for this momentous occasion Crypto Answers has done the legwork for you. The following top picks are chosen through combination of fundamental analysis, technical analysis, and market sentiment.
Ethereum (ETH): The safest bet
Ethereum is well established in the cryptospace. Since its August 2015 launch it has earned the respect of the community and climbed to the market-wide #2 spot. Some experts even suggest that Ethereum will overtake Bitcoin one day as the #1 currency. That event has yet to be witnessed, but it could happen. Ethereum offers more than Bitcoin on every front except for one: it has yet to contest Bitcoin’s household name. Casual crypto fans may not have an in depth understanding of blockchain or the overall market, but they have undoubtedly heard of Bitcoin. True enthusiasts, on the other hand, understand the fundamental advantages Ethereum holds over Bitcoin, and that continues to drive demand. Ethereum is incredibly fluid, averaging $444.8 million of daily volume, calculated using CoinmarketCap.com’s monthly figure.
Ethereum differentiates itself from all other coins by virtue of its decentralized applications (Dapps). Since its whitepaper inception, Ethereum has fostered a protocol that provides a secure, scalable platform from which other projects may launch. These projects are able to use Ethereum’s open source Dapps to run their own platform on its smart contracts, thereby saving the monumental time investment required to build their own proprietary protocol.
Technical analysis also serves to prove Ethereum’s bullish standing in today’s market.
Here we see ETH deeply entrenched in an ascending triangle formation, chased by its ascending 200 day Moving Average. Historically, ascending triangles are strongly bullish, and traders enter long positions once there is a breakout above the top. Buyers are expected to aggressively push the price upward on high volume in this scenario. We are already seeing the increase in volume (seen above).
Risk assessment is easy here. With the 200 DMA nearly aligning with the bottom of the ascending triangle, we can expect this to lend strong buoyancy to the price, limiting or preventing losses below $250.
Bitcoin Gold (BTG): The riskiest (and most exciting) bet
It is difficult to project the results of this heavily anticipated hard fork. Examining Bitcoin cash, however, can help.
In the aftermath of the previous hard fork, wallets and support for the new currency were not readily available. Uncertainty stemmed from this, causing BCH to sell off from its initial price near $400 to a low of $200. Once details were ironed out and various entities announced their support, a rally drove the price to around $915. To date, no wallets have been released for Bitcoin Gold. BTG will be born into an eerily similar atmosphere, and similar results can be expected, creating an excellent buying opportunity.
BURST: Top eco-friendly coin | Top coin under $0.01
BURST currently ranks 208th overall according to CoinMarketCapup.com with a market cap of $10.7 million. It averages over $250,000 per day in trading volume, bolstered by its environmentally conscious users.
According to Steemit user maninjapan1989, the following ratios apply to mining BURST vs Bitcoin:
Power Required: 1 to 20
Heat Output: 1 to 10
Noise Output: 1 to 100
Stability: 10x as stable (miner does not crash)
Instead of requiring an ASIC miner to navigate Bitcoin’s SHA256 algorithm, BURST uses free hard drive space to verify transactions. This concept is called “proof of capacity”, and is far less demanding. It is infinitely sustainable, requiring nothing more than your existing hard drive. This is one of the only profitable actions you can take toward residual income without any up front investment.
As with other altcoins, investors have sold off their BURST positions to buy Bitcoin before the fork. At $0.0059387 or 97 satoshis (at press time), BURST is looking ripe for harvest.
TenX (PAY): The fan favorite
TenX offers something most other projects do not: a working model. It has distributed over 10,000 debit cards that can be used in conjunction with its app allowing seamless spending of almost any cryptocurrency on the fly. It aims to bring cryptocurrency mainstream by making it easy to use wherever you go. Its cards can be used anywhere Visa is accepted.
It does, however, face two issues: 1) it has yet to be awarded a banking license, and 2) the United States regulatory structure has made the card unavailable in the US. Dr. Julian Hosp, TenX CEO, is very active in the community, updating project followers almost daily on the venture.
Time Your Entry and Exit
If you want to maximize your profit while minimizing risk, you must expertly time your market entry. Look for catalysts that could fulfill the projections determined by your analysis, and trade around them. In this case, Bitcoin Gold is the glaring catalyst that will undoubtedly move the market. Our intent is to diversify into the best altcoins as soon as the BTG hard fork is confirmed successfully.
Don’t be too greedy. Set an obtainable price target, and sell when it is reached. Overstaying the exuberance could leave you holding coins through a selloff without a clear projection of what is ahead. Uncertainty is like poison in the mind of an investor. Avoid it when possible by getting in and out of the market when you are able to read it.
Overall, this is an incredible opportunity that should be seized. Even if you do not have the capital to invest currently, monitor the price action and learn from it. A powerful lesson in market psychology is available to be learned that can be applied in the future!
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