As the bulls continue to run the Bitcoin market, investors have squarely focused their attention on this crypto. Meanwhile, many seem to not care about altcoins.
Just like BTC, altcoins provide investors with a good opportunity to make money, both now and in the near future. Making money in the near future is the interest of this article. If you wonder why not just invest in BTC amid the current boom, your answer is right below. If you want to explore something different (from Bitcoin), your guide is down below as well. And for those who are curious to know how profitable altcoins can be, read on.
This article will look at why investing in Bitcoin might be riskier than investing in altcoins, why you should consider altcoins, and what should be your next steps in that course.
Why Not Bitcoin? It’s Currently the Talk of Investors
Bitcoin is undoubtedly performing impressively. Since July, BTC investors have enjoyed a stable and significant growth of their assets. At the moment, it is the most enviable crypto. However, we cannot ignore the fact that the bulls will eventually run out of energy. Price falls after periods of booming growth are a natural part of market cycles. So, it is only logical to expect Bitcoin to start declining.
What makes Bitcoin particularly risky at the moment is that there is a high chance that it will rapidly devalue when that descent begins. To be honest, $16K (which is still growing) is not a stable price for Bitcoin. While we might disagree on what is a good average for Bitcoin, historical figures show that BTC has an affinity for $10K. The point is when the hype dies down, speculations are confirmed as either true or false, and investor sentiment switches to pessimism, BTC will shed value until it finds some semblance of stability.
But altcoins go through the same cycle, so what’s the difference? Of course, all crypto inevitably cycle through the bear and bull markets. The difference is that Bitcoin is already in the bull market, and this favors those who jumped in about four months ago (that’s July). If you are not one of them, you may as well consider yourself late to the party and look in the direction of altcoins.
Can You Make Profits Investing in Altcoins?
The simple answer is, it’s complicated. Some altcoins are performing okay while others are struggling. But to be fair, altcoins are still profitable.
Two things make crypto investments lucrative:
1. The margins you get through buying and selling coins, tokens, and other crypto-assets
— If you’re in the business of buying when prices are hiking and disposing of just before the descent begins, you can make profits trading any crypto. And if the price movements for an altcoin are significant enough and you get your timing right, you can make as much profit as you would with BTC.
2. The gradual increase in the value of A crypto
— Some cryptos experience sustained growth against the dollar over the course of their lifetime. This growth is usually attributed to the usefulness of the project/idea on which the crypto is pegged. Gradual value growth makes sense, particularly to long-term investors. Just as Bitcoin solved the problem of having money controlled by central authorities, different altcoins solve different problems, which gives them the potential for gradual long-term growth.
As you see, altcoins can be just as good as BTC. You only need to identify an investment ‘style’ that suits your needs and a good altcoin to match that.
Why You Should Consider Altcoins
#1: They are cheap
Actually, they’re not any cheaper than Bitcoin. Altcoins give you the chance to own more coins for the same amount of dollars. Whether this is any good is debatable, but the feeling you get by having a mind-boggling number of crypto coins to your name is satisfying. If you’re satisfied with your investment progress, you are likely to pursue the course further. That’s simply the logic.
#2. The most profitable venture is not necessarily the most suitable for you
High margins can be irresistibly tempting. But on the flip side, the risks associated with high-margin investments are proportionately scary.
We can safely assume that Bitcoin has had the highest growth in value within the last four months. However, we can also assume that the crypto will experience a slump when the bears come calling. Just because we don’t know when this will happen, we should not assume that it’s too far away. When choosing an investment, the amount of risk you’re willing to take matters a great deal. So, if you’re not into high-adrenaline crypto investments, you might want to consider altcoins for now.
#3. It would help if you diversified your investment
Investment wisdom dictates that one should never put all their investment capital into one asset. This is because no matter how lucrative an investment may appear, there is none without risk.
There is no guarantee that Bitcoin will not face some unforeseeable calamity that would shatter its prices. Thus, in the interest of spreading your investment risk, it is worth considering altcoins. If you’re already a Bitcoin investor, that’s good. But what’s better is channeling some of your capital to altcoins to balance off the potential risks of a catastrophic BTC crash.
Next Steps
If you are beginning to see altcoins as a good investment alternative in 2021, you are on the right path. Here are some steps to help steer you through that course.
#1. Research which altcoins are currently performing well
All altcoins are not equal, and so are their investment prospects. Look at the price history of the coin, evaluate the concept’s soundness, and find out what experts are saying about the crypto. This information will help you eliminate investments that might not work for you and narrow down to a crypto that’s suitable for your needs.
#2. Find out the altcoin’s growth potential
You create value by solving people’s problems, and that’s the philosophy behind most successful cryptocurrencies. There are many altcoins for which crypto analysts are still struggling to find their usefulness. However, for the successful bunch, their ability to solve different financial problems has already been demonstrated.
If you want to know that an altcoin will grow in the future, determine whether it has life-saving real-world use cases. Ethereum demonstrated the potential of smart contracts, and Ripple has shown how blockchain can disrupt real-time cross-border payments, and both have experienced sustained growth. As long as the crypto has a meaningful real-world utility, it is bound to grow, of course, unless something really wrong happens.
Final Thoughts
Altcoins are as good an investment as Bitcoin. Although BTC is currently booming, it is not the only worthy crypto investment. In fact, some investors may find altcoins a better alternative as some have yet to enter their bull markets. If you do your analysis properly and find a suitable altcoin, you can make reasonable profits when the market booms. Due to Bitcoin’s current hype and associated risk of entering the bear market, altcoins are a good option for spreading out the risk. Today is certainly a good day to think about altcoins.