With so much cryptocurrency in the industry, how can you make the right choice? The reality is that there are no right or wrong choices in the cryptocurrency market.
The crypto industry is filled with different coins. Each coin is from different motives in the industry. So knowing how every single coin in the market is doing will save you a lot of time.
With so many cryptocurrencies on the market, how can you make the right choice? Each crypto token offers different functions. Hence there is no right or wrong choice.
Equipping yourself with the right knowledge can help prepare yourself for the market and ensure that you make minimal mistakes.
Main reasons altcoins are skyrocketing
By doing Bitcoin PrimeThere are several altcoins that have the same meaning in the market. It’s just that they stay in the shadow of Bitcoin because of the small market cap compared to Bitcoin.
Bitcoin has the firstborn advantage that other cryptocurrencies are no less valuable. There are alternative cryptocurrencies that are more commonly used than Bitcoin. For example, Ethereum is the most widely used network for digital transactions.
Altcoins with their market capitalization.
- Ethereum (ETH): $ 21 billion.
- Bitcoin Cash: $ 7.7 billion.
- Litecoin: $ 3.1 billion.
- Dash: $ 1.3 billion.
These four are some of the famous altcoins used in the industry. There are more than 5000 Altcoi represented in the crypto trading industry. Some are restricted to regions and are only used in that region.
Let’s examine why altcoin is on the rise in the market.
1. Increase in regulation
Most of us believe that Bitcoin is the cryptocurrency that most transactions take place in. Well, it’s true in terms of trading volume. However, when we talk about the number of transactions, Bitcoin doesn’t even come close to Ethereum.
Most of the transactions are carried out over the Altcoin blockchain network. For example, the Ethereum network is used to implement smart contracts. And since the value of Ethereum is low compared to Bitcoin, new investors and traders are more comfortable trading Ethereum.
In 2020, the regulation of cryptocurrencies has seen a boost. It is believed that it will stay that way and even Altcoin will have a network to carry out smooth transactions.
2. Reduce portfolio risk
The most important aspect of investing in assets is that you’ve seen how you can increase returns without adding risk. You can certainly do something with Altcoins Investment. In order not to lose everything, you need to hedge against the main investment.
In the case of Bitcoin, the hedging investment is some fiat currencies and altcoins investments. Well we know some of you will argue with this content. Most of you believe that if Bitcoin fails, Altcoins will also fail. There is absolutely no logical relationship in the price increase between Bitcoin and Altcoins.
3. Information asymmetry
If you think the crypto market is not as efficient, investing in altcoin is a must. Even we believe that Bitcoin will remain the largest cryptocurrency in the world, but this is where our investor’s instinct comes in. We cannot take a situation for granted. We always need a backup plan to minimize risk.
- For example, we cannot guarantee that:
- Bitcoin will not get a critical error.
- The Bitcoin supply does not change.
- Bitcoin remains the top cryptocurrency.
There could also be other reasons why Bitcoin could fail. Therefore, different people have different information about cryptocurrencies. Hence, it makes sense to hedge against the market.
Just because Bitcoin has the largest supply in the market doesn’t mean it is the only cryptocurrency you can invest in. There are other cryptocurrencies that you can invest in that will make the same profit that you would get from investing in Bitcoin.
You might consider using these altcoins to diversify your portfolio and mitigate the risks associated with the Crypto trading market.