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Learn/Altcoins: Hidden Gems or Fool's Gold?

Altcoins: Hidden Gems or Fool's Gold?

COIN360

Oct 22 2024

last week4 minutes read
are altcoins gems or fools gold

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Alternative cryptocurrencies, also known as altcoins, have attracted tremendous interest in the cryptocurrency space. Unlike their more well-known counterpart, Bitcoin, altcoins are a broad category that holds many diverse opportunities for profitable portfolio additions.

In 2024, the future of these altcoins presents potential gains for traders. This article will provide some insight to help you decide if altcoins are hidden gems or fool’s gold.

Understanding Altcoins

Any virtual currency that is not bitcoin is referred to as an altcoin. They can be used in a number of ways, ranging from transacting to performing smart contracts as well as decentralized finance (DeFi) applications. The existence of altcoins has expanded the sphere of cryptocurrencies, and there are more than 20 thousand altcoins currently.

Most altcoins are developed on certain ideas that seek to address specific challenges. For example, Ethereum brought the notion of smart contracts that in turn empowered application developers to permission blockchain apps, commonly referred to as dApps. As a result, Ethereum has risen to become the second-largest cryptocurrency by market capitalization, worth approximately $318 billion in October 2024.

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Altcoins Trend in 2024

This year has seen unprecedented crypto acceptance across the United States, with 40% of American adults now owning crypto. This growth is partly due to the massive introduction of altcoins, improvements in technology, and the rising use of block chain solutions in organizations.

Overall, 2024 has been a slow year for the altcoin market. One major reason is the prolonged bear market that has been ongoing since the end of 2022 and which was made worse by the FTX collapse. On the bright side, the market has enjoyed a relatively bullish run within the third quarter of the year, with Bitcoin reaching a new all-time high. 

As in previous bull runs, the alt season was supposed to follow suit, which would see altcoins also reach new highs. However, that hasn’t been the case. Instead, a memecoin frenzy took place, followed by the growth in popularity of tap-to-earn projects on TON and Telegram.

Still, there’s been some major positive trends in the altcoin market. For instance, the Securities and Exchange Commission (SEC) in the United States approved Ethereum ETFs. There’s also talk about a Solana ETF with two issuers, VanEck and 21Shares, already filing for one. 

While there hasn’t been much bullish movement since the July 21st ETH ETF trading day, these achievements suggest a growing altcoin industry that may just turn out to be profitable for traders.


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Pros and Cons of Buying Altcoins

Buying altcoins can offer several advantages as well as risks that everyone has to consider.

Pros:

  • Lower Market Prices: Altcoins are generally less expensive compared to bitcoins since the number of coins that can be bought is more substantial.
  • Niche Applications: Quite a number of altcoins expose you to new industries or applications that could be useful in certain industries, which makes them promising.
  • Trading Opportunities: Fluctuations in altcoin prices mean that there are opportunities to make quick profits through frequent trading.

Cons:

  • Lack of Regulation: Most altcoin projects lack proper supervision and, therefore, could be easily fraudulent or mismanaged.
  • High Volatility: Potentially increased volatility is always beneficial, but at the same time, it is much easier to lose a lot of money.
  • Uncertain Longevity: While some altcoins would thrive in the long run, many are fundamentally unsound or simply lack a proper application.

Are Altcoins Hidden Gems or Fool's Gold?

Understanding altcoins is important for every trader or average hodler in the crypto industry. Based on current trends, altcoins show some promise of being the hidden gems in the crypto market.

Promising altcoins such as Solana and Cardano attract traders and hodlers seeking alternatives to Bitcoin more than ever. Solana is popular because of its high transaction speeds and low fees. The altcoin also boasts a market cap of $69 billion and a year-over-year return of 545%. Meanwhile, Cardano maintains a market cap of $13.4 billion and a year-over-year return of 53%.

Conclusion

A lot of traders expect profitability from the altcoin purchases. But whether altcoins are hidden gems or fool's gold depends on the particular project you’re betting on. For an altcoin to be considered a hidden gem, it needs to have sound tokenomics behind it. Not only that, but the team creating it needs to come up with an innovative solution—not another Ethereum killer or Solana killer project.

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