Understanding Altcoins
Altcoins are all cryptocurrencies other than Bitcoin, each with unique features.
Categories of Altcoins
Layer 1 Blockchains
- Ethereum (ETH): Smart contracts
- Solana (SOL): High speed, low fees
- Cardano (ADA): Research-based
- Avalanche (AVAX): Subnet architecture
DeFi Tokens
- Uniswap (UNI): DEX governance
- Aave (AAVE): Lending protocol
- Chainlink (LINK): Oracle network
- Lido (LDO): Liquid staking
Meme Coins
- Dogecoin (DOGE): Original meme coin
- Shiba Inu (SHIB): Ethereum-based
- PEPE, BONK, WIF: Newer memes
- Extremely volatile and risky
Stablecoins
- USDT (Tether): Largest stablecoin
- USDC (Circle): US-regulated
- DAI: Decentralized stablecoin
- Pegged to $1 USD
Evaluating Altcoins
Fundamentals
- Team and development activity
- Use case and problem solved
- Tokenomics (supply, distribution)
- Market cap and liquidity
- Community and ecosystem
Red Flags
- Anonymous team
- Unrealistic promises
- Low liquidity
- Concentrated token holdings
- No real utility
Trading Altcoins
BTC Correlation
- Most alts follow Bitcoin
- When BTC dumps, alts dump harder
- When BTC rallies, alts can outperform
- BTC dominance shows rotation
Alt Season
- Period when alts outperform BTC
- Usually in late bull market
- High risk but high reward
- BTC dominance decreasing
Risk Management
- Never go all-in on one altcoin
- Diversify across categories
- Keep majority in BTC and ETH
- Size positions by market cap
- Be prepared for 80-90% drawdowns