What is an Altcoin? How to invest in Altcoins

Altcoin, alongside Bitcoin, is the second most indispensable part of the crypto market. Nevertheless, it is not an easily understood term by crypto beginners.

quangphan

Published May 26 2022

Updated Oct 04 2024

5 min read

What is an Altcoin?

Altcoin (Alternative coin) is every other cryptocurrency aside from Bitcoin. This concept came about as Bitcoin was the first cryptocurrency to ever exist, and any token to appear later was only considered the “alternative” of Bitcoin.

The first Altcoin to exist was Litecoin, which was forked from the Bitcoin blockchain in 2011. Recognizing Bitcoin’s few shortcomings, Litecoin was created to implement a higher-level Proof-of-Work consensus mechanism than that of Bitcoin, allowing it to be faster and less energy-consuming.

Altcoin vs Bitcoin: What is the difference?

So now we know that Altcoins are alternative cryptocurrencies that are created after Bitcoin. What does this mean?

First of all, as a result of being later, Altcoins have the opportunity to identify Bitcoin’s problems and tackle them. Therefore, they are often better in many aspects: technology, availability, flexibility... The process also works with Altcoins themselves, whereas new Altcoins are constantly released to be a better version of a particular precursor.

Second of all, Altcoins often return higher gains compared to Bitcoin. When Altcoins, in general, were recognized, Bitcoin had already grown exponentially since the beginning. Hence, the room for growth and profit of Bitcoin becomes smaller.

On the opposite, users can invest in Altcoins even before they can actually be traded on secondary markets. This opens more opportunities for investors to get involved in the crypto market.

Last but not least, Altcoins are more volatile than Bitcoin. Since there are over 13,000 Altcoins on the market while there is only one Bitcoin, the liquidity of Altcoins is extremely spread and fractured.

Being volatile means they can benefit investors with higher ROI (Return On Investment) but also possibly more massive losses. That is why a lot of crypto investors nowadays prefer Altcoins over Bitcoin as an option of investment. Even though they are risky, they can return exponential gains over a short period of time.

What is the Altcoin season?

Altcoin season is when the money flows to Altcoin rather than Bitcoin. As a result, most Altcoins will have an incredible performance of 5x-10x within just a short duration. Buying any Altcoin during this time will most likely give you awesome profits.

For an Altcoin season to begin, the money has to be primarily poured into Altcoins. Such money flow can be from Bitcoin, stablecoins, or outside sources.

A possible signal to indicate an Altcoin season is when Bitcoin Dominance gets really low (down 20-30%).

Advantages & Disadvantages of Altcoins

Advantages

High possible return.
Can be used for a variety of purposes (Farming, Staking, Bonding...).
Various options available.
Constantly innovating to tackle a practical problem.

Disadvantages

High return also means high risk.
Too many options to choose from makes it difficult for beginners.
Lower popularity & smaller Market Cap.
Low liquidity with high spread and volatility.
Since Altcoins can be created quickly and easily, many fraudulent ones have been around.

Altcoin exchange: Where to buy Altcoins?

There are a wide variety of exchanges out there for you to choose from if you want to buy an Altcoin. However, it depends on where that specific Altcoin is supported on.

Here are some most popular and used exchanges in crypto:

CEX: FTX, Binance, Coinbase...
DEX: Uniswap (Ethereum), SushiSwap (Multichain), Curve Finance (Multichain, for stable assets), Coin98 Exchange (Multichain)...

Coin98 Exchange is a decentralized exchange (DEX), as well as a Multi-chain liquidity aggregator that offers users a wide variety of DeFi services (swap, stake, lend, borrow...) through intuitive and simple interfaces. You can use Coin98 Exchange to easily find and buy your favorite Altcoin, wherever it is available or supported…

How to invest in Altcoins

There are various ways to invest in Altcoins, and over time the number is still increasing. Here are some of the most popular options if you are interested in Altcoin investment.

Hold

This is the simplest strategy to implement, which is especially useful for beginners. You only need to choose a favorite Altcoin with good fundamentals and keep it until its price goes up.

If you follow this way, it is highly recommended to consider Altcoins like a business. Each of them focuses on a specific niche and attempts to address a particular issue. Choose the one that has great products, suitable solutions, an enthusiastic community, and a dedicated team.

Holding requires you to be patient to keep the tokens for a really long time. This can get as far as years.

Trade

Trading is a more advanced way to earn profits with Altcoins. In order to trade Altcoins, you need to understand technical analysis thoroughly. The ideal scenario of trading is to buy at the support levels and sell at resistance ones.

Trading often involves the use of leverage. By leveraging your capital of up to 20x or even higher, you can earn much larger profits even with a small fluctuation in price.

Each trading session lasts for a much shorter period of time compared to holding, with only about minutes to hours or days at max.

Other

More and more options are becoming available for Altcoin investors. For example, Play to earn is a new way to invest in Altcoins: you receive tokens as rewards for playing games. In this way, you are not directly buying Altcoins, but can still possibly get them.

Another possibility is to seek Airdrops. You receive airdrops by being an active member of a particular project, which will reward you for your enthusiastic participation and dedication. Doing airdrops is arguably the best way to get exposure to Altcoins at minimal risks; therefore, it is a great way for beginners to start getting into the market.

Altcoin exchange: Where to buy Altcoins

There are a wide variety of exchanges out there for you to choose from if you want to buy an Altcoin. However, it depends on where that specific Altcoin is supported on.

Here are some most popular and used exchanges in crypto:

CEX: FTX, Binance, Coinbase...
DEX: Uniswap (Ethereum), SushiSwap (Multichain), Curve Finance (Multichain, for stable assets), Coin98 Exchange (Multichain)...

Conclusion

This is everything you need to know about Altcoin. If you have any questions about Altcoin, don't hesitate to leave a comment below. The Coin98 team will answer your questions as soon as possible.