While regulations and transparency have improved since the ICO craze of 2017, it is essential for every investor to approach alt hunting with risk management measures in place. This is even more relevant in growing sectors such as DeFi, where the risk of rug pulls are present around every corner.
Discovering a potential low-cap gem can be a highly rewarding adventure when approached with a high degree of financial responsibility and proper due diligence. Keep these tips in mind when putting your money into altcoins.
- Do your research
Before investing in any altcoin, be aware of the risks and potential rewards. A good starting point is to research the project, the team in charge, and ensuring that the community is genuinely invested. Any credible crypto project will have a whitepaper which lays out a roadmap for what the project wants to achieve. Review this thoroughly and pose your questions to the project team if anything still seems unclear to you. By taking the time to research projects and platforms, you can protect your investments and minimize the chance of losses.
- Diversify your portfolio
This is an investing tenet as old as time itself –– rather than investing into one single altcoin, spread your risk by allocating your capital across several altcoins. If one project doesn’t do as well as expected, you can at least rest assured that your other holdings will offset any losses.
- Use reputable exchanges
There are numerous advantages to investing in altcoins on reputable exchanges like ProBit Global, including factors like enhanced security, reliability and especially important in the case of certain alts; liquidity. The ability to easily buy and sell your altcoins can be the difference between a 10% return and a 10x return.
- Keep an eye on market trends
A key part of investing in altcoins is staying glued to market trends and news. Given their overall volatility, altcoin prices tend to swing heavily on news-related sentiment, which makes this fundamental analysis imperative.
One final tip for all the altcoin buyers out there: don't invest more than you can afford to lose. Although the potential for upside is massive, it’s worth repeating that altcoins are highly volatile and risky investments.