Altcoins are digital assets that are alternatives to Bitcoin. They are often referred to as “Bitcoin alternatives” or “altcoins.” These are cryptocurrencies that were developed after Bitcoin. After many investors missed out on the early adoption of Bitcoin, they took advantage of these new coins.
While Bitcoin investment has been stable since its launch, the altcoin market hasn’t enjoyed the same stability. Coins such as Ethereum have shown good levels of stability, but some newer coins are still trying to find their footing. Nevertheless, investors see a lot of potential in altcoins and are investing in them.
Here are five reasons why altcoins may be the best crypto investments right now:
- Stable Price Growth
The first thing you should look for when investing in any cryptocurrency is the price trends over the years. You want to invest in a coin that has shown stability and doesn’t have large price swings. Altcoins such as Ethereum have shown stable price growth since their launch. It has become one of the most popular altcoins on the market and has a strong community backing it.
If you’re tracking Ethereum at Swyftx, you’ll find that it can experience an average of up to 3% price increase in 24 hours. This goes to show how popular and stable it is as an investment. Newer coins such as Bitcoin Cash or Litecoin have also demonstrated price stability. While they haven’t been around for as long as Ethereum, they have still found a place in the market. Such features, such as stable price growth, make altcoins a desirable long-term investment.
- Volatility That Favors Day Trading
Some investors fear cryptocurrencies because of their volatile nature. However, for day traders, this is seen as an opportunity to profit. The key to day trading is to buy low and sell high. You want to take advantage of the price swings in the market. Altcoins are known for their volatility, which can be seen as a good thing by day traders.
During extreme price movements, Altcoins can experience up to 10% price swings making them ideal for short-term trading strategies. Moreover, as Bitcoin price swings aren’t as high as before, Altcoins make the better choice when looking for quick trades.
- You May Be An Early Adopter
Being an early adopter can often be a good thing when it comes to investments. You want to invest in a coin that has the potential to grow. While Bitcoin is the most popular cryptocurrency on the market, it may have already reached its full potential. Altcoins are still trying to find their place in the market, where you can take advantage.
You may be able to get in early on an altcoin that has the potential to grow. This gives you a chance to make a profit as the coin’s price starts to increase. While there’s no guarantee that an altcoin will succeed, being an early adopter does give you an advantage. For example, in November 2020, the price of Dogecoin was a little over USD $0.003, while in August 2021, it was trading at about USD $0.30. This was about a 10000% price increase which indicates how profitable adopting a coin early enough can be.
- Diversifying Your Portfolio
Investing in cryptocurrency is just like investing in the stock market. If you put all your investment in one basket, you’re likely to increase the risk. This is why you should always diversify your investment portfolio.
The good thing about altcoins is that they allow investors to diversify. While Bitcoin may be the most popular cryptocurrency, it shouldn’t make up your entire portfolio. You want to have a mix of different coins to reduce the risk. For example, you can divide your portfolio into Bitcoin, Ethereum, Litecoin, and other altcoins. This will help to diversify your portfolio and protect you from any major price swings.
- Altcoins Have Different Use Cases
The success of a cryptocurrency isn’t just about the community behind the project. It’s also on how many use cases the coin has. The more use cases a coin has, the more likely it is to succeed.
Bitcoin is primarily used as a store of value. On the other hand, the Ethereum blockchain has developed so many decentralized applications that it has become the go-to blockchain for developers. This is because Ethereum provides a platform for developers to create decentralized applications.
Similarly, Cardano has been used to develop smart contracts on the blockchain. The team behind the project is also working on a decentralized application platform. This makes Cardano a coin to watch out for in the future. These several use cases increase the demand for these altcoins and make them a suitable investment.
Final Thoughts
Altcoins are often seen as risky investments because of their volatile nature. However, there are many reasons why altcoins make suitable investments. Altcoins allow investors to diversify their portfolios and protect them from any significant price swings. All you need is to research the right altcoin and make your investment.
