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

1. Never go all-in on one altcoin
2. Diversify across categories
3. Keep majority in BTC and ETH
4. Size positions by market cap
5. Be prepared for 80-90% drawdowns