Altcoins Vs Bitcoin Which Should You Invest In?

Please fol­low and like us:
Pin Share

When it comes to invest­ing in cryp­tocur­ren­cy, there’s no deny­ing that Bit­coin is the safest and most well-known option. It’s been around since 2009 and has estab­lished itself as the king of cryp­to. How­ev­er, as its mar­ket con­tin­ues to grow, its returns have dimin­ished. I’m not say­ing Bit­coin isn’t high­ly prof­itable because it is, I’m say­ing if you missed invest­ing in BTC ear­ly when it was around $1 or a frac­tion of a $1, it’s going to be hard­er to turn a small sum of mon­ey into a lot. This is where invest­ing in alt­coins comes in.

Alt­coins, or alter­na­tive coins, are any cryp­tocur­ren­cy oth­er than Bit­coin. They offer investors the oppor­tu­ni­ty to get in on the ground floor of a new and excit­ing web 3.0 project, and the poten­tial for much high­er returns than Bit­coin in the short term.

It’s impor­tant to note that invest­ing in alt­coins can be riski­er than invest­ing in Bit­coin, as they are less estab­lished and have less of a track record for suc­cess when com­pared to Bit­coin. How­ev­er, for those will­ing to take on that risk, the poten­tial rewards can be great, because there are some well-estab­lish alt­coins that have weath­ered many cryp­to win­ters that are a safe bet.

One way to gain more Bit­coin is to invest in alt­coins and then pour those prof­its into Bitcoin. 

This strat­e­gy allows you to take advan­tage of the high returns offered by alt­coins, while still main­tain­ing a posi­tion in the more sta­ble Bitcoin. 

By diver­si­fy­ing your port­fo­lio in this way, you can max­i­mize your poten­tial returns while min­i­miz­ing your risk.

Alt­coins have the poten­tial to be a more prof­itable invest­ment than Bit­coin in the long term. With alt­coins, you have the oppor­tu­ni­ty to invest in projects that have the poten­tial to dis­rupt entire indus­tries, and there­fore have the poten­tial for much larg­er returns. 

Ethereum which is the king of alt­coins, can’t even be con­sid­ered an alt­coin any longer. Its mas­sive ecosys­tem is the dri­ving force behind NFTs, web 3.0, ENS, DeFi, and much more. 

Altcoins Or Bitcoin?

altcoins vs bitcoin

First, let’s define the investors who might have dif­fer­ent per­spec­tives on this topic. 

The first investor might be a risk-averse investor who is look­ing for a steady and reli­able return on their investment.

The sec­ond investor might be a risk-tak­ing investor who is look­ing for high returns and who is will­ing to take on a high­er lev­el of risk.

A third investor might be a long-term investor who is look­ing to hold onto their invest­ment for an extend­ed peri­od of time by dol­lar-cost-aver­ag­ing in and out of the mar­ket bot­toms and tops.

Alt­coins have a low­er mar­ket cap­i­tal­iza­tion than bit­coin. This means that they have more room to grow in val­ue, and as a result, they have the poten­tial to pro­vide high­er returns. For exam­ple, if an alt­coin has a mar­ket cap­i­tal­iza­tion of $50 mil­lion with a great use case, it has the poten­tial to reach a mar­ket cap of $500,000,000 which rep­re­sents a 100X return on your invest­ment. Mean­ing you can turn $1,000 into $100,000. Many projects did that in the last bull run, and many not only did 100X, but 1,000X, and even 10,000X. There are a ton of exam­ples of cryp­to projects that did that. 

This is pos­si­ble because of the extreme volatil­i­ty of cryp­to. Volatil­i­ty is a fea­ture and it’s the price you pay for suc­cess in these markets.

If an alt­coin has a volatil­i­ty of 20%, it can pro­vide a 20% return in a sin­gle day. On the oth­er hand, if a bit­coin has a volatil­i­ty of 5%, it can only pro­vide a 5% return in a sin­gle day. That’s one rea­son why risk-tak­ing investors might pre­fer alt­coins over bitcoins.

Addi­tion­al­ly, many alt­coins have a strong com­mu­ni­ty behind them. They have a group of loy­al sup­port­ers who believe in the project and are will­ing to hold onto their coins for an extend­ed peri­od of time. This can pro­vide sta­bil­i­ty to the price of the coin and make it less like­ly to expe­ri­ence large price fluc­tu­a­tions. This is why long-term investors might pre­fer alt­coins over bitcoins.

It’s also worth not­ing that some alt­coins have a spe­cif­ic use case or a real-world appli­ca­tion which makes them more valu­able, and open to wild speculations.

Anoth­er ben­e­fit of invest­ing in alt­coins is that it allows you to diver­si­fy your portfolio.

Diver­si­fi­ca­tion is impor­tant because it helps you to spread the risk of your investments. 

By invest­ing in mul­ti­ple alt­coins, you can reduce your risk of los­ing your entire invest­ment if one of the coins per­forms poor­ly. This is why risk-averse investors might pre­fer alt­coins over bitcoins.

Conclusion

Okay, so here’s the thing. Bit­coin is def­i­nite­ly the safer bet when it comes to invest­ing in cryp­to. It’s been around for a while and it’s got a proven track record. Entire coun­tries are adopt­ing it as a legal tender.

But, here’s the oth­er thing: as more peo­ple invest in it, the returns on your invest­ment can start to dwin­dle unless you have a sub­stan­tial amount of mon­ey to invest in Bitcoin.

So, what a lot of smart investors are doing is invest­ing in alt­coins and then using the prof­its they make from those invest­ments to buy more Bit­coin to hold for the long term.

This way, you’re able to get more Bit­coin for your mon­ey. And it’s not just indi­vid­ual investors who are doing this – a lot of insti­tu­tion­al investors are doing it too. So, if you’re look­ing to get in on the next bull run, and you don’t have a ton of mon­ey to invest, these alt­coins could be a smart strat­e­gy for you.

Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published.