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Should I Buy Bitcoin or Alt Coins?

to buy Bitcoin or Altcoin

Recent Google Trends indicate that searches related bitcoin and bitcoin halving have spiked.

One would expect that being a somewhat new asset class and known to experience lows as low as 85% to highs in 1000%, people would be weary of Bitcoin and cryptocurrencies.  However, the trend indicates otherwise.

Concerns raised by the pandemic and people losing their livelihood confined as spectators in their home is quite devastating.

Desperate times prompt people to look for alternatives as the traditional systems failed them.

The bitcoin tutorial subscriptions on Udemy and Coursera are going up indicating that more new people are entering into bitcoin and cryptocurrency space.

One of the more generic questions that people, especially those who are new to the crypto space, is: should I invest in Bitcoin or Alt Coins?

Alt coins, for those who are still learning the jargon, are all coins other than bitcoin. Yes, we consider bitcoin forks as alt coins too. There is only one Bitcoin with ticker BTC.

Coming back to our question: should I invest in Bitcoin or Alt Coins?

Bitcoin or Alt coin(s)?

Bitcoin is at $7300 from it’s all time high of around $20,000 in 2017.  That is a 64% decline in its value.

During the 2017 rally, some alt coins went from 10 cents to $12.  An impressive 120x gains. Today, some of these same coins are trading at 20 cents. An ugly drop of 98.3%.  

If you bought bitcoin during the 2017 rally you are left with 36 cents on the dollar.  However, if you bought these alt coins during their peak – you would now have .017 cents on the dollar.

Obviously, that is an isolated example. 

Some alt coins have actually gone up from their 2017 high. For instance, Binance coin was around $2 during the 2017 rally and today it is trading at $14, an impressive 700% gain.

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This is how powerful the leverage between bitcoin and alt coin looks

Let’s run some scenarios where you are invested 100% in bitcoin or 100% in a losing alt coin or spread your risk among bitcoin, losing alt coin and a winning alt coin. Here is how your portfolio would have looked in each of the scenarios.

Scenario 1: Investment only in Bitcoin

You would be 64% down, as discussed above, turning a $3000 investment into $1905 a loss of $1085.

Scenario 2: Investment in a losing alt coin

In this scenario where you have invested all of $3000 into a losing alt coin – you would have been left with $50, a whopping $2950 in losses.

Scenario 3: Investment in Bitcoin, losing alt coin and a winning alt coin

Investing in Altcoin Price Prediction 03

Let’s say your profile included an equal balance of bitcoin, losing alt coin and winning alt coins (in this case Binance coin).  You would have net 438% gains and your $3000 would have been worth $7382 today.

Trick (or call it luck if you are not studying) is to have the proper leverage.

Never buy when market is greedy

Whether you decide to buy bitcoin or alt coins or both, never buy when the markets are going euphoric. That is the biggest lesson from the 2017 rally.

However, the 2017 price points may become a new low for the bitcoin and alt coins in some future, however, until that happens – we should be careful and remember these golden rules:

  • Never invest during market euphoria
  • Never invest more than what you can afford to lose
  • Always make use of dollar cost averaging
  • Never invest without doing your own research
  • Never invest because some random guy on the internet tells you to

Having learned about various scenarios and the wisdom nuggets above, where are you invested in the cryptos?  Bitcoin or alt coins or both?

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Thank you for reading and sharing this article. Stay safe and healthy!

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

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