How To Choose Altcoins For Investment?

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Over the past month, the situation in the crypto market has changed dramatically. Bitcoin has slowed its growth and its share continues to g...

Over the past month, the situation in the crypto market has changed dramatically. Bitcoin has slowed its growth and its share continues to gradually decline. At the same time, various altcoins were activated. Some of them have risen in price several times in just a month. All these factors point to the period, which is called the season of altcoins, writes RBC Crypto.

Altcoin season in simple terms

Altcoin season is the period when investors prefer to invest in alternative coins, explained Viktor Pershikov, the lead analyst at 8848 Invest. According to him, this does not mean that bitcoin is becoming unattractive for investment or falling in price, it is just that less capitalized assets come to the fore.

"Investors want to make money on those assets that have not yet grown as much as bitcoin has grown, and which still have the potential to update historical highs," the analyst added.

The growth of altcoins enhances the increase in the total balance of bitcoin on cryptocurrency exchanges, says Maria Stankevich, director of development for the EXMO exchange. Traders are sending coins to their exchange accounts for a potential quick sale or buying alternative coins, she added.

How to analyze the market

To select altcoins during this period of time, one must proceed from a sectoral analysis, namely, to determine which market sectors are currently in demand, and which of the assets of these sectors are lagging behind the market, advises Viktor Pershikov. According to him, the blockchain platform token sector is now "very hot", and assets such as NEO, EOS, and TRX, unlike Ethereum, Cardano, or assets on the Binance Smart Chain, "openly slow down."

“Consequently, we can bet on the additional capitalization of these assets against the background of the sector's growth and total market capitalization,” the analyst noted.

The same situation, according to a leading analyst at 8848 Invest, is observed in the DEFI sector: there are locomotives like UNI, LINK, and CAKE, and there are lagging SUSHI, GRT, XVS, and many others. If we analyze the sectors, then the plus-minus projects are geared towards solving the same problems, so their technological rivalry comes to the fore when choosing assets for investment, added Viktor Pershikov. He also recommended staying in trend and consider the tokens of those sectors that are in demand from investors.

“DEFI and platforms continue to be attractive to investors, and CELO, LSK, and QTUM have yet to show themselves in the smart contract sector. These are attractive tokens in the medium term, ”the analyst explained.

Checklist for choosing a coin

When choosing a token for investment, Maria Stankevich is guided by the following indicators:

  • Evaluation of the project from the point of view of the work done - is the idea interesting and promising, is there a working MVP (minimal working prototype), what the roadmap looks like, how the work is progressing, whether deadlines and deadlines are met;

  • Assessment of the project from the point of view of the community: what is the general information field around the project, how the branches are maintained on specialized forums;

  • Assessment of the team: who is in charge of the project, whether there have been successful projects in the professional history of the team;

  • Evaluation of the project from the point of view of market valuation - does the business really benefit and is necessary for the market;

  • Evaluation of the project from the point of view of existing investors - if Grayscale or Microstrategy have invested in the project, this is most likely a good project;

  • The exchanges on which the project is traded. Better one - but the first or second echelon, than many, but low-quality.

Despite the great interest of investors in alternative coins, the EXMO exchange development director recommends keeping a 50% share of bitcoin in the investment portfolio. Thus, you can protect yourself from sharp fluctuations in the quotations of low-capitalized assets.

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Cryptocurrency Magazine - Crypto Market Updates: How To Choose Altcoins For Investment?
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