Within the world of cryptocurrency investment there are many ways in which you can make money. Some prefer the relative stability of the likes of Bitcoin and Ethereum for their investments, whereas others seek to make somewhat larger gains with investments in what we call alt coins. These are coins which have low market caps and which are often quite new, coming off the back of an exciting project which has been launched. Experts like Robert Testagrossa understand the power that alt coins can have, yet they are also keen to warn investors of the potential risks that are associated with these coins.
Here is all you need to know about alt coins.
The first point to make here is that whilst the success of Bitcoin is what generally shapes the market, the success of alt coins is often in opposition to what those larger coins do. This is often known as alt season and we will see things like uplifts of 50% whilst Bitcoin moves by perhaps 3%.
If you look at the history of almost all alt coins, you will see that from the moment that they launch they will shoot up by thousands of percent, and then drop back down to a low level again days later. This is because there are so many who will buy the pre-sale IPO for the coin, and then quickly sell once the price shoots up. Eventually however the price will level out, which is why the timing of your purchase is so important. If you see an alt coin going to the moon then it is probably best to simply wait it out and then see where it ends up, rather than trying to jump on it early and then losing money.
It is absolutely vital that you understand the product which you are buying into before you part with any of your money. The reason for this is that there is a large number of coins out there which are not in fact tethered to a particular product, or they are attached to a fake product. What these individuals will do is to create an alt coin which is essentially worthless, and then spend money on Twitter bots to drive up interest around the coin. Once the value increases because of mass buying, the originators of the coin will dump what they have, taking profits and reducing the price to almost nothing. Many have lost money because of this.
Alt coins require a different approach because the majority of them will eventually be worth very little. This means that you have to not only get in at a good price, but you also have to know when is the right time to get yourself out. See the likes of Bitcoin and Ethereum as long term plans, and look at alt coins as a nice way to make a little bit of money as you go.