Since I opened up a discussion with my readers, my inbox has been flooded with…
Cryptocurrencies are going nuts, and you’ve got everyone talking about bitcoin, ethereum and litecoin. However, there are thousands of alternative coins (altcoins) that people should be keeping an eye on. Altcoins are simply coins that serve as alternatives to bitcoin. The cryptocurrency market needs altcoins due to the hard cap of bitcoins and other altcoins. If the hard cap is reached, prices could be more volatile, if demand changes. That said, we need to start looking at other ways to trade the cryptocurrencies, and altcoins could be your best bet.
Although many early bitcoin adopters find altcoins unnecessary, and they think altcoins won’t succeed and can’t compete with bitcoin’s infrastructure. However, that’s not the case with all altcoins. Some offer faster transaction times and a decentralized payment system. Since altcoins provide decentralization, there is competition in the market, and in turn, this spurs innovation and improvements.
Before you start taking money out and placing bets on a lot of altcoins, using the “spray and pray” method, you should conduct your due diligence.
When you’re looking for altcoins to trade, you’ll need to avoid scams. That means, you’ll need to research the company offering altcoins and its goals. Scamcoins are those in which the creators are solely looking to profit, for themselves. Companies offering scamcoins don’t care whether investors make money.
Some ways to spot a scamcoin:
There are multiple ways to find altcoins that aren’t scams. Generally, you would want to look for altcoins that have solid teams. In other words, you want to see the creators of the team with a great track record in the community. You generally do not want to get into altcoins in which the creators have very little experience in the cryptocurrency game. That’s just a recipe for disaster.
You also want to see whether there’s a large number of supporters for the altcoin. Even if the idea seems silly, as long as there is demand and a community of users, the altcoin could rise.
Take CryptoKitties for example. It’s an Ethereum-based digital kitten game and its processed over $10M in sales, on its decentralized marketplace. Each digital kitten represents a different crypto asset, and the ownership can’t be altered. Some of these digital kittens are going for over $100K. It might sound silly at first, but people are actually buying these digital kittens. Again, just as long as there is broad support for the token, it could rise significantly.You’ll need to figure out what’s a scamcoin and a “real” altcoin.
If you do your due diligence, you’ll realize CryptoKitties isn’t a “scam,” even though it’s silly. The creators aren’t sitting on a bunch of tokens and trying to pump and dump their digital kittens. Rather, they’re using a sustainable revenue model, in which they receive a small percentage of each transaction.
In general you want to look for altcoins with:
Again, you’ll want to read up on the company offering the coin and see whether you could trust them. Additionally, you could go on Reddit and other cryptocurrency forums to see what the community is saying about them. Moreover, you’ll want to avoid coins that have multiple articles saying it’s going to rise X times within X number of days or months. That could just be someone trying to pump their position. Don’t get fooled by this.
For the most part, when you’re looking for altcoins, you can use CoinMarketCap to find the “top” altcoins. You’re able to filter by market capitalization or volume.
Source: CoinMarketCap
If you’re tech savvy, you could build something like my tool that filters for altcoins to trade:
Similar to your traditional investment portfolio, you want to diversify your holdings. The more diversified your portfolio, the better. In other words, you don’t want to put all of your eggs in one basket. Don’t invest a large portion of savings into cryptocurrencies. Since cryptocurrencies are relatively new, there are multiple risks, and you could lose a large portion of your investment. You only want to invest what you’re comfortable with losing.
For example, if you’re willing to lose $1,000, you could look for multiple altcoins with immense support and liquidity, and you could split up your capital accordingly. If you find 5 altcoins, you could create an equal-weight portfolio by investing $200 into each of those coins.
If you’re just getting into cryptocurrencies, there are a couple of things you need to learn. First, you’ll need to choose a cryptocurrency to buy. If you trade or invest in altcoins alone, this could be one of the hardest steps.
Once you’ve found some altcoins to trade, you’ll need a wallet to store your cryptocurrencies. To make things easier, we’re going to focus on soft wallets.
First, check to see if you have access to your keys.
When you’re buying altcoins, you should see if you have access to the private keys. If you don’t, do not use that wallet provider. Technically, if you don’t have your private keys, you don’t have control over your altcoins. Consequently, whoever has access to those keys could use your altcoins. You need to check to see whether you have access to your private keys at all times, ensuring you have control over your coins. In other words, guard your private keys like your life depended on it. Once you lose your private keys, you could say goodbye to your cash.
The next thing you want to see is whether the wallet provider is fully transparent with their operations. Although this might seem confusing at first, you want to see whether the wallet provider’s code is open source. If it isn’t open source, you pretty much have no idea how the provider is securing your coins (if at all). Cryptocurrencies are all about decentralization, and when providers have open source code, it means they’re transparent, and altcoin users could review and check to see whether there’s vulnerabilities.
Thereafter, you need to make sure the wallet provider is reputable, and whether users have had bad experiences with it. The best way you could do this is search for the wallet provider on forums, such as the Bitcoin Forum or Reddit, to see what users are saying about it. If there aren’t any threads about the wallet provider, you should create a thread, and other users might comment and tell you about their experience.
There are a few mobile and desktop wallets out there that you could compare, including Mycelium, Bread Wallet, Jaxx and Armory. There are also exchanges that offer web wallets, like Binance, Changelly, Bittrex, Poloniex and Bitfinex. If you choose to, you could store your coins online with the exchange, but you could run the risk of losing your coins. I would advise getting another mobile or desktop wallet, to properly secure your coins. With a mobile wallet, you store your coins on your device, while a desktop wallet stores your coins on your computer. Most importantly, you should set up multi-factor authentication. That means you’ll need to verify your login using either your mobile device, email or answering security questions.
Once you understand and set up your wallet, while properly secure your funds, you’re on your way to start trading altcoins! You’re going to need to do some due diligence before buying any old altcoin. That means reading up on the company offering the altcoin, seeing whether it’s likely to be a scam and then looking at technical analysis tools to signal when you might want to buy and sell.
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Terry Scott runs Crypto Trader Pro. He has been trading stocks for nearly two decades and cryptocurrencies for two years. He primarily trades altcoins using proprietary trade tech and is constantly in search of the next big move.
Well, bitcoin sold off right to our target from a few weeks ago. Our community was looking at the descending triangle that was forming, and we noted there could be some heavy volatility around this range. Now, bitcoin’s selloff last week was one of the worst weekly losses since 2013, but there could be some trading opportunities on the long side. Bitcoin is still looking week, but there could be a potential short term play in the cryptocurrency soon. You should keep in mind this is a highly risky strategy and bitcoin could continue to sell, so you need to have a good risk-reward ratio and follow some technical levels.
Bitcoin broke through a key psychological level: $10,000 recently. If you remember, once bitcoin broke above $10K, it skyrocketed and reached $20K on some exchanges.
This was the chart we were looking at a few weeks ago in Bitcoin/U.S. dollar (BTC/USD):
Here’s a look at BTCUSD now:
Bitcoin is trading in an area where it’s had a tough time deciding which direction it wants to run to. When there’s a panic selloff, you have to think this might be an overreaction. Generally, when BTCUSD is down so much in a short time frame, there could potentially be a buying opportunity, but you should look to take profits early especially if there is a catalyst. Bitcoin bears are still battling, and it’s going to be hard to pick a bottom. We’re still watching this descending triangle pattern form. If the triangle starts to tighten, there’s some hope for bulls because bitcoin could break back above the resistance line. I think we’ll need to wait a few weeks for a potential reversal, but I don’t suggest traders get trigger happy and buy it without a good reason to.
The main reason for this drop was attributed to worries of a global regulatory crackdown, causing traders and investors to scramble to get out. Even though banks, like JP Morgan Chase and Citi, are limiting credit card purchases for bitcoin, people are still able to buy with cash. My thinking is this is just an emotional selloff and you could look to buy BTCUSD for a potential reversal.
Here’s a closer look at BTCUSD on the hourly chart:
Well, you see how BTCUSD made a low just below $8K and reversed nearly $1K recently. You might be wondering how you could have risked managed this. One way would be to use the 200-day simple moving average (SMA) as a level to watch and potentially get long.
If you look at the daily chart, the 200-day SMA is around $7,800. So you could’ve placed a buy order around $7,990 or $8,000 and use the 200-day SMA to stop out. Now, your target would be $9K.
However, BTCUSD broke below its 200-day SMA and traders are finding a tough time finding a bottom. The next area to look for a potential short-term buying opportunity would be $6K.
What’s your risk reward here? Around 1 to 5. You would have risked only around $200 to make $1,000.
When others are panicking and selling their cryptocurrencies, you should take a moment and assess your plan. Keep in mind there are a lot of people who are long from much higher levels, so they might have placed stop loss orders at key levels. Consequently, if BTCUSD falls below a key level, like $7K, the currency could be flooded with market orders to sell. This would push it a lot lower and potentially uncover buying opportunities.
If you’re trying to trade BTCUSD on a dip, you need to have clear levels to potentially buy and exit. A good rule of thumb is to look at simple moving averages, such as the 50-, 100- and 200-period SMA on the daily chart. Additionally, you might want to look at the 13- and 30-period SMA on the hourly chart. It’s a tough trade, but when something falls over 30% in just a few days over speculations, it might be oversold. Unless the U.S. government says bitcoin will be banned, you could still look to buy with the right risk-reward scenario (over 1 to 4, in other words risking $1 to make $4).
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Terry Scott runs Crypto Trader Pro. He has been trading stocks for nearly two decades and cryptocurrencies for two years. He primarily trades altcoins using proprietary trade tech and is constantly in search of the next big move.
Bitcoin had a monster move in 2017, and it’s been all the rage. Everyone has been trying to get long, but the recent negative catalysts caused bitcoin and cryptos to sell off. This led to crypto fear selling…and some contrarian traders think it might be time to buy bitcoin and altcoins.
Warren Buffett famously said, “Be fearful when others are greedy, and greedy when others are fearful.”
No matter what markets you’re trading, it’s always helpful to keep this principle in mind. Bitcoin moved from around $700 to nearly $20K in just one year. The cryptocurrency market is unlike anything the world has ever seen before. However, similar to the stock market, it is being traded by humans, and we humans are full of greed and fear. This causes crypto price movements to trade very much like stock price movements. Enough with trading philosophy, let’s look at some technicals in bitcoin and other altcoins.
Here’s the daily chart in Bitcoin/U.S. dollar (BTC/USD):
I see the $8,000 area being around where the current descending triangle is heading towards in Bitcoin. Now, BTC is highly volatile and it could easily trade in range between $6,000 and $9,000, an area in which the bulls and bears fought for a while.
Litecoin/U.S. dollar (LTC/USD) also has a descending triangle, and I think it could trade between the range of $140 and $200. There could be a lot of bouncing around here, bullish traders buying at the lower trendline and bearish traders selling on bounces. Here’s what we’re watching in LTC/USD:
Now, Ripple/USD (XRP/USD) is another altcoin we’re watching after the panic sell off yesterday. The crypto fell over 60% from its highs, and it’s still trading in a down channel. I think if XRP/USD breaks above the upper down channel line, it could start running higher. However, if there’s a negative catalyst and XRP/USD doesn’t break out of the channel, Ripple could stay in this down channel and trade around the $0.85 and $1 area. Even though I think Ripple could pull back again, I don’t think it’s a bubble yet. Here’s a look at what we’re watching in XRP/USD:
Another altcoin to watch is TRON (TRX). It’s part of our lotto-pick land, and it’s in the same space as Ripple. Although TRON’s technology is not nearly as well-developed as that of Ripple’s yet, I think there’s an attractive opportunity for huge gains on it. TRX/USD is currently trading around $0.09 and $0.10, or 0.000008 and 0.000009 BTC, and it’s broke out of its descending triangle. I think this could easily retest the $0.20 and $0.30 area. Here’s a look at the 13-hour chart on TRX/BTC:
Our goal as a community is to remain focused and calm during these times. We are focused on BTC, LTC, XRP and TRX, and will plan out a trade after the sell off. So, even if a rebound in the crypto markets is short-lived, we are still able to capitalize on it. Again, keep in mind the crypto market is highly volatile, and you should understand the risks involved. Most importantly: Don’t put all your eggs in one basket, and “Be fearful when others are greedy, and greedy when others are fearful.”
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Terry Scott runs Crypto Trader Pro. He has been trading stocks for nearly two decades and cryptocurrencies for two years. He primarily trades altcoins using proprietary trade tech and is constantly in search of the next big move.
