With so much Cryptocurrency present in the industry, how can you make the right choice? In reality, there are no right and wrong choices in the Cryptocurrency market.
The Crypto Industry is packed with different coins. Every coin is in the industry for different motives. So, knowing how each and every coin performs in the market will save you a lot of time.
So, with so many Cryptocurrency in the market, how can you make the right choice? Every Crypto token caters to different features. Hence, there is no right and wrong choice.
Arming yourself with the right knowledge will help you prepare yourself for the market and ensure that you make minimum mistakes.
Major Reasons Why Altcoins Are Soaring
In the Bitcoin Prime, there are several Altcoins that hold equal importance in the market. It is just that due to the small market cap compared to Bitcoin, they remain in Bitcoin’s shadow.
Bitcoin has the firstborn advantage, that does not mean that other Cryptocurrencies are less valuable. There are alternative Cryptocurrencies that are used more than Bitcoin. For instance, Ethereum is the most used network for digital transactions.
Altcoins with their market cap.
- 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 present in the Crypto trading industry. Some are limited to regions and are used in that region only.
Let’s explore why Altcoin is soaring in the market.
1. Increase In Regulation
Most of us believe that Bitcoin is the Cryptocurrencies in which most of the transactions happen. Well, it is true in terms of the trading volume. However, if we are talking about the number of transactions, Bitcoin does not even come close to Ethereum.
Most transactions are done using the Altcoin Blockchain network. For instance, the Ethereum network is used to implement smart contracts. And as the value of Ethereum is low compared to Bitcoin, new investors and traders feel more comfortable trading in Ethereum.
In 2020, the regulation of Cryptocurrencies has seen a boost. It is believed that this will continue, and even Altcoin will have a network to make smooth transactions.
2. Mitigate Portfolio Risks
The most important aspect of investing in assets is that you have seen how you can increase the return without increasing the risk. Well, you can certainly do with Altcoins Investment. To avoid losing everything, you need to have a hedge against the main investment.
In the case of Bitcoin, the hedge investment will be some fiat currencies and Altcoins investment. Well, we know that 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 relation in price appreciation between Bitcoin and Altcoins.
3. Information Asymmetry
If you believe that the Crypto market is not that 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 kicks in. we cannot take any situation for granted. We always need to have a backup plan to mitigate risks.
- For instance, we cannot guarantee that:
- Bitcoin won’t get a critical bug.
- Bitcoin supply will not change.
- Bitcoin will remain the top Cryptocurrency.
There could be more reasons as well why Bitcoin could fail. As such, different people have different information regarding Cryptocurrencies. Therefore it makes sense to have a hedge against the market.
Just because Bitcoin has the largest supply in the market, it doesn’t mean that it is the only Cryptocurrency you can invest in. There are other Cryptocurrencies that you can invest in and enjoy the same profit you would enjoy from Bitcoin investment.
You could consider using these Altcoins to diversify your portfolio and mitigate the risks associated with the Crypto trade market.