There comes a moment in everyone’s cryptocurrency journey when they need to decide what their strategy is. Most of us believe this market is destined for incredible things, but it would mean nothing if we decide to invest in the wrong projects. These small decisions that you make will end up determining your fate in this market and will be the difference between being successful and losing everything.
Perhaps the biggest of these decisions is whether you will chase altcoins or invest solely in blue-chip projects. Both options have their benefits, and also their weaknesses.
The first thing you need to know is why lower-cap altcoins can be so tempting. The reason is that people who have just begun investing in the cryptocurrency market, already feel like they have missed the boat on blue-chip projects such as Bitcoin or Ethereum. They aren’t lucky like the early adopters who were able to buy Bitcoin or Ethereum for under $100. They feel like they missed that opportunity and therefore need to search out other projects that could be the “next big thing.”
The other benefit of altcoins in comparison to Bitcoin and Ethereum is that they have much smaller market caps. Currently, their market caps are $530 billion and $230 billion respectively. While altcoin projects that people are investing in are often ranging from a few million dollars in market cap to a few hundred million. This means that once the prices of these projects begin moving, they will likely soar much higher in percentage compared to BTC or ETH. People are depending on the fact that all projects are currently connected to Bitcoin and ETH like a magnet. When the prices of those projects increase, the altcoins move as well.
While altcoins can be many fast movers to the upside, they will also drop in value even faster. During the darkest days of this crypto bear market, both Bitcoin and Ethereum were down by nearly 70%. However, there were many altcoins that were down by 99%. If you don’t time the market correctly and either take profits or trade in Bitcoin, you could lose everything.
Most altcoin investors accept this risk and simply hope that the coins will recover during the next bull cycle. However, that is an even riskier strategy. There is no guarantee that these coins will ever recover, and it is more likely that they will trend to zero. and never recover. This is where Bitcoin and Ethereum shine. While they might not see the percentage of gains that some altcoins will have. The likelihood of them surviving for the long term is much higher.
You need to ask yourself the question, do you trust in your ability to time the market perfectly?
If you can, then chasing altcoins might be the best decision for you. However, if you can’t then sticking to blue chips would be your best option. Having a coin that sees higher gains but eventually goes to zero, or having a coin that moves a little slower, but continues to grow for generations. That is the decision you must make.
As for me, I prefer to stick to the blue chips. My portfolio consists mostly of Bitcoin, Ethereum, and only a few other projects. I much prefer to build a strong portfolio foundation that lasts for generations, rather than something that fizzles out in a few days or never even amounts to anything.
How about you? Do you prefer chasing altcoins or investing in blue-chip cryptocurrencies?
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