Should You Invest in Bitcoin or Altcoins?

It’s time again! The crypto market took a huge crash recently, and that means now is a great time for beginners to start trading and investing in cryptocurrencies, without having to partake in risky moves such as shorting. You may find yourself wondering which is the best coin to invest in, and why people choose to invest in one coin over the other. Let’s explore in this article, which doesn’t serve as financial advice! As always, do your own research before deciding to invest, and what to invest in.

Photo by Jievani Weerasinghe on Unsplash

What is an Altcoin?

Before we begin, let’s ask the obvious question for beginners. What are altcoins? Well, Altcoins are defined as any cryptocurrency other than Bitcoin. Yeah. That’s literally the definition. In the same way of how a beverage is any drink other than water, altcoins are any coins other than BTC. Some mainstream examples are Binance coin, Ethereum, Dogecoin, Solana, Litecoin, Cardano, among hundreds of other coins

Photo by Executium on Unsplash

Why Do People Invest in Altcoins?

After learning the definition of an altcoin, the answer as to why people invest in altcoins may seem simple: variety. People often say don’t put all your eggs in one basket, especially in trading(either stocks or crypto). So people may invest in many different altcoins, or a mix of bitcoin and an altcoin.

Crypto traders may also be attracted to altcoins as they are usually more volatile, especially ICO coins. Many crypto traders use a “pump and dump” model, where they invest in a coin over time before garnering the masses to invest in the same coin. Since new coins are so volatile due to their low marketcap, the coin will spike in price before the pump and dumpers dump their (crypto) load, pocketing the profit from the spike in prices.

However, in recent months, there has been a huge disruptor to the crypto market: Solana(SOL). Solana has been dubbed as “The Next Big Thing” by most, and its exponential growth in recent months pretty much proves it. The reason SOL is increasing drastically in popularity is because of the technology behind the coin. Solana is capable of over two thousand transactions per second, which is astonishing, especially when compared to Binance coin’s 100 transactions per second. This is ignoring the fact that Binance also spearheaded the blockchain technology, and its 100 transactions per second was once regarded as massive compared to Bitcoin and Ethereum’s 15 transactions per second. Solana is also able to lower its gas fees to an almost negligible cost of 0.25 CENTS per transaction, which is tiny compared to $2.50 and $20 for Bitcoin and Ethereum respectively. This has led to Solana’s bull run into the front pages of most crypto exchanges, promising a great future for SOL coin!

Photo by André François McKenzie on Unsplas

Why Do People Invest in BTC?

Bitcoin is the OG of cryptocurrency in that bitcoin literally pioneered the technology and concept of blockchains and cryptocurrencies. Bitcoin saw an exponential rise in price until April 2021, where it reached an all time high of $64.5k before crashing to about $35k. Since then, Bitcoin has again seen a rapid increase in value to its present day value of about $61k, only having a notable dip in late September 2021 when China announced a total ban on cryptocurrency activities in the nation. Zooming the graph out, this shows that bitcoin has been on a pretty stable increase, with many experts predicting the price of bitcoin to continue skyrocketing for the foreseeable future. This then makes BTC a very attractive investment option for beginners and veterans alike, with growth more likely than many ICO coins.

Which Coin is Safer?

To put it bluntly, there’s no real “safe” coin to invest in. The world of cryptocurrency brings about great risk and volatility within its facade of great rewards. That’s not to say you can’t trade safely, it’s just that you have to be careful in how you trade to prevent losing too much money when you inevitably make a loss.

In general, Bitcoin is safer in the sense that it’s more stable. As mentioned, newer coins tend to be much more volatile due to their low marketcap, causing any small volume of price to lead to a much larger jump in volume. Think of it this way: if I took $1000 and pumped it into a coin valued at $0.0001 vs I pump the same value into BTC which is valued at $60 000 at the time of writing, the small coin will see a much larger change in price whereas BTC will barely move.

However, at the same time, due to Bitcoin’s much higher volume, traders and investors of Bitcoin will react much faster to any changes in the market, such as when Elon Musk stopped accepting Bitcoin as payment, which means that any crashes in price may happen way faster, or even too fast for you to react to.

Photo by Jievani Weerasinghe on Unsplash

So Should I Invest in Bitcoin or Altcoins?

Again, it depends, this time on what kind of investment and trading strategy you’re interested in taking up. For most people getting into cryptocurrencies, Bitcoin is their go-to option as it is the most familiar name in the crypto space.

Conversely, you can also consider common altcoins such as Binance, Ethereum and Solana as they aim to disrupt Bitcoin’s dominance. If you’re feeling extra risky, consider meme coins such as Dogecoin and Shiba coin, but do be warned that meme coins are often met with rugpulls that leave investors with nothing and pump and dumpers who drive prices sky-high before dropping it all the way again, so do your own research before deciding what you want to invest in. Learn what your risk management is, and how to approach crypto investing and trading before making your decision, and stay safe while investing in crypto!

Add a comment