Sound ideas on how to play the alt-coin market, and for what purpose

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I watched this video again. Yes, again, because it is that good.

https://www.youtube.com/watch?v=WAbfiLGaGD8

It is a video by Gerhard - Bitcoin Strategy entitled I did this mistake 😔Please don't do it...

It's worth watching because he is giving some very good points about playing the alt-coin market.

I am trying to assimilate those ideas so I am writing this post.

The key point is crypto market isn't like the stock market, and investing in a basket of assets as we do in the stock market won't work. This is because crypto projects aren't as well regulated as publicly listed companies that issue stocks. This puts us at a disadvantage when others have better information than us, and when they buy at a way lower price than us... they can easily dump it on the market. Indeed, this is what I would do if I have a bag full and they mooned. The correct thing to do is to take profit. When many people do that, the price will drop. Thus the volatility in the crypto market.

In short, we shouldn't be viewing the crypto market as having the growth nature of the equity market. At least not yet, and it certainly does not make sense to buy a basket of alt-coins and hope that they average out the gains and the losses to give us some profit.

It seems that it is better to stack BTC instead, as that is a better way of capturing the uptick of overall blockchain adoption. DCA into BTC seems to be the way to go.

That is not to say that there is no way of making money through the alts. One thing for sure, success is not through buying 20 different tokens. Rather, it is through investing in projects that one knows well. Be the one who buy low sell high, so to speak.

Here my takeaway is that almost certainly, one should be playing the alt-coin market for the purpose of buying more BTC with the gains. My personal hunch is that it is impossible for the crypto market to function well if BTC diminishes to what an alt-coin is like. First, as it exits its number one spot, losing its dominance, many people will withdraw their funds and go back to fiat. The confidence in the alts and crypto projects will falter. Many altcoins could either disappear or suffer huge losses. There will be no Alts/BTC pair to trade, i.e., the base currency that supports the trading of alts will be gone...

In conclusion, one really has to be very cautious when investing in the alt-coins. As for Hive, I am investing what I need to use this blockchain advantageously, but of course, since I know this network well, why not accumulate a big bag to later sell it to buy more bitcoin!

P/S: This is not financial advice, and please do your own due diligence before investing.

If you read this far... and if you are a like-minded Hiver who is on the path to learning more about Hive and crypto investing, and if you like to be tagged when I write such posts, I welcome you to leave a comment below and let me know. We can form an alliance to support each other's growth.

You might be interested in this post, @thatkidsblack, @graciousvic, @peniel2010, @deflacion, @jacoalberts, @limonta, @young-kedar, @svanbo, @sumotori, @zakludick, @poplar-22 and @hankanon!

What is Hive?

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(Edited)

PIZZA!

$PIZZA slices delivered:
@svanbo(1/5) tipped @cryptothesis
technicalside tipped cryptothesis
cryptothesis tipped kenny-crane

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Interesting post! My thoughts:

Information on Tokens

I see the idea of having information about a token mentioned twice. We're at a disadvantage to others with more information, and we should only invest in alts we have good information about.

I'm thinking there are two kinds of info in investing. First is to know as much as possible about the project and its creators. We can read what the team has published and what others say in response to that. If the project is launched, we have the price history.

Second piece of info is, what are experienced whales doing with the token. Experienced means they have done a certain amount of trades of a certain amount over a certain period of time. Whales meaning they hold a lot of assets. All this data is on-chain and can be analyzed.

Both types of info are important but is the second more important? If experienced whales are buying a token, do we think they are doing it with expectation of price appreciation or to get rekt? Seems obvious that they expect price appreciation on some timescale. A pump and dump could happen in hours and they're hard to time correctly. We should filter out experienced whales who commonly pump and dump but focus more on those who hold for a longer term. Holders who are putting a lot of money into a token likely also took the time to obtain the first type of info I mentioned above. Again, all the data is on-chain for all to see.

While the data is on-chain for all to see, it would be helpful to have a tool that does the filtering automatically according to a set of preset parameters but also with the freedom to set our own parameters.

I know of one such tool with a free mode and a (very expensive) paid mode. I'm now trying to evaluate whether this tool, which seems to be able to shed light on the second type of info, can actually be effective at finding altcoins that appreciate better than most.


Basket of Tokens

It is suggested that buying 20 tokens won't lead to success. I think the point is that picking 20 tokens at random isn't a good idea; pick ones you know a lot about. So this idea about buying few or many tokens comes down to one's goals in regard to appreciation, time horizon and appetite for risk.

I think token funds have their place. In stocks we have the super popular SPY and QQQ Exchange Traded Funds (ETFs).

On Hive we have several tokens on hive-engine which are buying baskets of tokens that we can participate in via their token. For those who don't have the time or interest in researching individual tokens, they can research one of these basket tokens and find one with what would be slower more steady appreciation due to the averaging affect of the price fluctuation among the many component tokens.


Get HIVE to Sell

I think Hive is a great place to meet people and learn things. That alone is great! We can also possibly earn Hive and HBD in the ways we all know. Those ways take a certain time investment. Writing and reading/curating take more time while earning interest on HP and HBD in savings take no time.

However we get Hive and HBD, many tend to want to sell some to invest elsewhere or convert to fiat to buy real life wants and needs. I'm thinking that what we have here now is a pretty good mix of holding and selling. I think it's been fairly steady for many years and we have a good thing going.

I wonder if what some people talk about - onboarding millions of new people or attracting new people through new base layer features - will have an overall good or bad affect on the system. Many new people seem to want to post and sell most of their rewards so I don't think that's going to be good due to downward price pressure from all the selling. Of course I may be wrong.

Adding new base layer features seems to be a good idea but can be risky. It's going to affect the ecosystem for sure, but probably in a good way. We have to keep up with at least some of what other projects are offering. But we also don't want to wreck the working system we already have with Hive and HBD.

In general, we have aa good niche here. We all want it to continue and we would be happy with price appreciation. But people want to sell what they got by putting in time so that may limit the price appreciation. I agree that there is nothing wrong with selling, but if more selling is going on than buying, well we know what that does to price. So in an ideal world, people here, on average, should buy or hold more than they sell, if their goal is to keep this good platform stable and possibly growing a bit over the coming years. But I believe in freedom of economic activity so of course each person should do what they consider to be the right thing in their case!

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Thanks for sharing your insights.

Indeed it all boils down to what hopes we have in this space in a realistic sense.

For indices within HE, maybe a small bet on it is afterall fine.

For Hive, I agree that people come and go .. doing whatever they wish, but yet it has been working well. I wouldn’t bear to liquidate my HP holdings!

Still gotta find a way forward to read those on-chain analytics easily! !PIZZA

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You're writing On Hive we have several tokens on hive-engine which are buying baskets of tokens that we can participate in via their token. Could you give an example (or more than one !LOL)?

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I agree with his outlook and I don't think altcoins are very safe at all. They need to evaluated at an individual basis and there needs to be a plan when you get into the altcoin. I trust a place like Hive but I wouldn't trust DOGE or some other crypto.

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But do you count DOGE among the Altcoins?

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Yes, I would consider DOGE as an altcoin.

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Just asking because a lot of people consider it as a Shitcoin. I started to doubt about it since it's arond for quite some time now and stays more or less "stable" as far as I followed it... !CTP

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What makes you believe that Bitcoin is a better investment than a certain Altcoin? !PIZZA

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