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How to Pick the Winning Altcoin to Trade

Since 2017, Bitcoin has inspired the development of a myriad of altcoins. Four years ago, thousands of Bitcoin investors saturated the market, creating a need to diversify the crypto space. In return, this led to the creation of alternative coins to BTC, including Cardano (ADA), Chainlink (LINK), and Polkadot (DOT).

Although they do not share Bitcoin’s fame, they have gained their share of fame over the years. Also, many have surged in value from just a few scents to hundreds of dollars. Therefore, investors are always on the lookout for the next winning altcoin.

Unfortunately, with so many cryptocurrencies on the market, picking the next altcoin sensation is tricky. So, we decided to make the task easier for you with a short guide to trading altcoins for profit. Read on to discover how the spot the best altcoin to trade!

What Is a Winning Altcoin?

Adding a new altcoin to your portfolio is harder said than done. Almost every alternative to Bitcoin has different working mechanisms and features. Therefore, you must research high and wide to find one that has winning properties.

The first step into choosing an altcoin is doing your due diligence. For example, you can consult other investors who have experience in trading that specific altcoin. Also, you can look into the altcoin’s whitepaper or read about the project’s roadmap and goals. Lastly, you can go as far as to ask your questions directly to the altcoin’s developers.

An excellent place to start your research is historical charts available on the internet. There, you can look into the history of the altcoin, its circulation, and market cap. Due to crypto volatility, the current price is also essential but not a deal-breaker since it could change soon.

Stay away from altcoins that have experienced significant drops in market value. Next, we’ll consider some factors when choosing the right altcoin for your investment strategy.

Understand the Underlying Technology

Generally, many altcoins entered the crypto market as mere Bitcoin replicas. Instead of offering newer, better, and more innovative alternatives, they led projects to dead ends. After all, mimicking the king coin’s success is not as easy as it seems.

However, a few altcoins managed to change the perspective and compensate for some of Bitcoin’s lacking. For instance, Ethereum uses advanced technology to make prevailing financial resources better and safer instead of replacing them like Bitcoin. Likewise, this altcoin is the native asset of a gigantic blockchain supporting the development of other altcoins. Therefore, it deserves its high value and market cap position just behind Bitcoin.

When selecting a winning altcoin, it is vital to consider the real-life practicability of its underlying technology. Ask questions like:

  • What financial issues is it trying to solve?
  • Is its underlying technology likely to reach mainstream adoption?
  • Does it have a reasonable chance to disrupt the financial world?

If the answer is no to all of these questions, it is best to stay away from it.

Check the Altcoin Issuer

A team can either build or break its product or business. Regardless of how powerful the underlying technology is, the team behind any cryptocurrency predicts its success. A solid visionary team creates a more robust crypto solution with a clear strategy as a general rule of thumb.

So, when considering the winning altcoin, go through its whitepaper. And ask yourself this:

  • Do you relate with the vision or what the crypto-asset is trying to achieve?
  • Does it drive a hard bargain?

A crypto whitepaper is a blueprint of the cryptocurrency’s main goal and how it plans to achieve it.

Additionally, you want to check the list of altcoin founders and discover who is in the crypto space. After all, the technical team is the backbone of any altcoin. Furthermore, it is primarily responsible for the direction and overall success of the coin.

Research each founder and try to understand their mindsets to see if they can develop a winning altcoin. Also, consider the executive team as the more significant part of the altcoin developers’ community. The executive team must be strong-willed and also active on various social media platforms. Visit networks like GitHub, Reddit, and Facebook to see how they feel about your favorite altcoin.

Analyze Daily Trade Volume

Checking and evaluating daily trade volumes of an altcoin is an easy task, especially on platforms like CoinDesk and CoinMarketCap.

You may discover only a few people transact the altcoin and the trade volume is low. In this case, keep away from it. This means that it does not provide a straightforward solution to the finance sector or is not popular.

Daily trade volumes aid in showcasing how much crypto has been transacted within the past 24 hours. It aids new and potential investors in determining the demand for a particular altcoin. Investors can also gauge the future implications of the altcoin.

However, it is vital to note that high trade volumes imply a popular crypto asset. Sometimes, even the most minor popular coins have higher trade volumes than the more reputable ones. So, you want to monitor and evaluate the trade volumes for several days before making a decision.

Observe Possible ICO Events

Initial Coin Offerings (ICOs) are events through which digital currency companies raise working capital and release new cryptocurrencies. They function like the stock market whereby investors bet on a crypto asset with the best possibility of high ROI.

When deciding on the winning altcoin, it is best to consider ICO offerings. This will help you see which coin will be successful and give you returns on your investment. Consider those altcoins that stand out and often attract a vast number of investors.

Consider less-popular cryptocurrency exchange platforms

If you want to discover a less famous but promising altcoin, you should consider unknown crypto exchange platforms. This is because powerful trading platforms are not likely to list newer coins.

However, you should ensure that the platform is credible and not a rogue site looking to steal your cash. Do your research and find out who is behind the exchange platform. Evaluate the team’s experience and determine how credible it is in the crypto space.

Conclusion

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Hundreds of thousands of coins are available in the crypto space. Therefore, it can be overwhelming to select the most profitable one. Luckily, the guidelines in this article should help you choose a winning altcoin that fits your portfolio.

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