Altcoin Investing - A Simple Strategy To Emulate
Maxis Miss Out
Crypto investors who choose the path of Bitcoin and Ethereum “exclusivity” will unfortunately underperform in this bull market, and quite substantially at that. It’s not like 2021 where ETH was primed for significant appreciation. This time around, it’s Solana. If you are a regular reader, you will note that this has been my opinion since 2022, despite the FTX collapse, and the carnage it caused for Solana.
Even at this early stage of the cycle, Solana is producing enormous gains, especially when you consider that it’s a Top 10 Cryptocurrency. ETH hasn’t done much at all. If it wasn’t for BlackRock, I wonder where it would be trading now. Essentially, money is made in altcoins, and more specifically micro-caps. BTC and ETH are “safe” stores of value due to their longevity and enormous reach. However, in this game, that is not indicative of gains.
Blue chips provide acceptable gains, while simultaneously providing the highest level of investor confidence and stability. If you are looking to make life-changing gains in Crypto, Bitcoin, and Ethereum should not be a majority holding in your portfolio. Such a portfolio is more geared towards newcomers, who are unfamiliar with this market and are likely to lose their shirt if introduced to micro-caps and other high-risk/reward projects.
For investors who are perhaps more familiar with the altcoin market, a diversified altcoin portfolio makes a ton of sense. Even with such an approach, the risks remain. However, they are mitigated, to a certain degree. Diversification is a given. However, another element is required, in the form of capital deployment. This particular aspect of investing and trading can be developed to the point of actually becoming an art form.
A Solid Approach
Diversification, coupled with the effective deployment of capital can increase your odds, while simultaneously mitigating risk. Sure, you can exhaust your capital all at once. However, what if your selections underperform, or even worse, experience an isolated swan event? This can and does happen, even in bull markets. It’s a lot more unlikely, but still a possibility. There will always be certain projects that underperform the altcoin benchmark.
As an altcoin investor, you are looking to beat the altcoin benchmark. The most effective approach is to add to your positions during corrections. However, it needs to be a little more complex than that. Essentially, I look to add to my winners. Responsive projects that simultaneously maintain a level of correlation with the market ensue confidence. Buying the dip on a project that is not responsive is not only a waste of time, but also capital.
This strategy can then be further enhanced by adding to the projects that are responsive but are simultaneously offering the best discount. Certain coins will retrace more significantly at different times, and identifying these moments can add up over time. Historically speaking, we are looking to top out during the final quarter of 2025. Things will however become a lot clearer, the further we travel into the heart of the bull.
An early entry is imperative. However, continued accumulation is required to build a sizeable position over time. For instance, I picked up my initial bag of Taraxa at $0.001 and will look to keep adding to my holdings, as the market provides opportunities. A strong entry that is then protected through continuous, modest accumulation is extremely powerful, especially if the project moons.
Final Thoughts
Investing is very much an art form and application of disciplines. In other words, as an investor, you can eventually become skilled to the point of talented excellence. There’s a lot more to markets than “buy low, sell high”. It’s a foundational principle but has numerous manifestations and expressions. To grow in this understanding is to develop as an investor or trader. All the best in this exciting chapter! Catch you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
Diversification and effective capital deployment are crucial for crypto investors aiming for substantial gains in the current bull market. Solana is emerging as a top performer, outpacing Bitcoin and Ethereum.