This week it became known that a number of cryptoinvestors received record profits: their sums were about 3000-7000%. This was due to the fact that several altcoins demonstrated an explosive growth of quotations at once. At the same time bitcoin is still unable to recover from the grand collapse that took place this spring.
.Last week, the cryptocurrency community was rocked by the news that a Poloniex cryptocurrency exchange user sold his Kishu Inu coins for 60 times the market price. He instantly earned $15,000 on it. Thus, the profit was 6000%. Earlier, Ethereum added 30% in a day. A number of other cryptocurrencies followed similar fluctuations. Economists say that because of this situation, interest in altcoins began to grow, but they warn: the risks in the crypto market are increasing, although the potential for super profits is also large.
Economists say that this situation has increased interest in altcoins.
Cryptocurrencies that are dangerous to buy now
The most popular resources among cryptocurrency traders CoinGecko and CoinMarketCap provide data on 7535 and 10081 assets. Only an extremely small fraction of them are destined to survive. The vast majority of these coins lack serious funding, a team of professional developers, and a community of users. There are also no milestones on the roadmap for creating a marketable product and tokenomics around it.
Aaron Chomsky, head of investment at ICB Fund, is confident that "only those projects that meet the above criteria will survive. And those investors who didn't do a proper analysis before buying this or that asset could face a total loss of money. From the point of view of the financial market, this is nothing new. The composition of stock indices is constantly changing, companies go bankrupt and become targets for takeovers due to changes in the balance of competitive forces and the structure of the economy itself. The same can be expected in the cryptocurrency market, which reflects its distant digital future.
He believes that today it is safer to bet on leaders - those projects that have big ambitions and actually strive to make them a reality. The analyst doesn't recommend to chase tokens that are actively discussed in social networks. The most prominent example is Dogecoin and its clones.
"Even despite the hopes of Ilon Musk, who expresses love for the coin on Twitter and says that in the future Dogecoin will become a "people's coin" for payments, in reality there are not many prerequisites for this, and the price of the coin may reflect a much bigger bubble than all known such episodes in history before. "Popular love" and the popularity of this or that meme are transient things. Over the longer term, economic laws will cause the price of this token to collapse if it continues to represent an asset created as a joke with no real useful functions," Chomsky explained.
The CEO of cryptocurrency p2p marketplace Chatex, Michael Ross-Johnson, for his part, believes that it's rather dangerous to buy all the "top" cryptocurrencies that everyone is hearing about right now. In his opinion, the market is clearly overheated. So, the volatility of such assets will be very high, it is extremely difficult to predict the rate. "Moreover, recent market events (when Elon Musk makes bitcoin go down or up sharply by publishing certain news) have shown how much one person can control the market by creating a news background," Michael Ross-Johnson added.
Cryptocurrencies that could bring super profits
Chomsky believes bitcoin will not disappear in the future because of its limited issuance (21 million coins). It is already perceived as the digital equivalent of gold amid unprecedented stimulus from the world's leading central banks, undermining confidence in traditional currencies. Current quotes in financial markets reflect unprecedented optimism. This raises fears of a deep correction, and bitcoin is perceived as an asset in which it will be safe to survive.
"Recovery to records after the decline can be expected in Ethereum, which could be the "fabric" of the future digital economy built on the blockchain. At the end of this year or in the first half of the next year it will switch from the current consensus algorithm Proof-of-work to Proof-of-stake, which together with the deployment of layer 2 solutions will increase the throughput capacity of the Network to values exceeding 3.5 times the current capabilities of payment systems. Ethereum has developed a strong ecosystem of applications, developers, and community. With the current exorbitant commissions of Ethereum, many of the so-called Ethereum killers - Cardano, Avalanche, Solana and others - are trying to challenge its leading position," Chomsky believes.
The analyst predicts that high interest and demand awaits Polkadot with Cosmos, aimed at interaction between blockchains. Good prospects, in his opinion, have coins, building a decentralized Internet. These are Internet Computer and Filecoin. There is a future for certain tokens that play a certain important role in one segment or another. Among them are Polygon, Chainlink, Uniswap.
CEO and CEO of vvCube Consulting Group Vadim Tkachenko says that "the cryptocurrency market is a high-risk market, and one should understand that. Any investment here should imply that there may be both upsurges of this currency and complete collapse. As recent events have shown, the value of this or that type of cryptocurrency can depend on the news, a single word from a popular person or just a joke. Therefore, here you should first of all understand why you need a digital coin. For investments it is not the best asset. But for an urgent online settlement with a seller (one or two days at most) it can be quite a working tool. Of course, bitcoin and Ethereum are the most successful. The others, such as LightCoin or Monero, require careful study before investing in them."
Experts also point out one very important point. On January 1, a law came into force that prohibits paying for goods and services in Russia with cryptocurrency. There are a lot of restrictions in other countries as well. Accordingly, free circulation of altcoins as a means of payment is under question in many states. Here, too, there may be its own difficulties.
"In the short term, the most popular currencies that are in high demand (like Dogecoin) are definitely not the most promoted and popular currencies have growth opportunities. While Elon Musk is playing with "dogecoin" on Twitter, new blockchain infrastructure projects like Polkadot, Atom, Free TON are developing their projects and communities, which means we can expect growth of these coins soon. It's also worth looking at DeFi projects, but you need to study each one and not get into hypes that grow on tweets," believes Ross-Johnson.
How do you tell the difference between a promising altcoin and a pacifier?
According to Chomsky, it is important to avoid assets outside of top-30, not to rush with purchase before exhaustive analysis, read profile resources, raise education level, follow project news in social networks. It is better to focus on long-term investments, not resorting to leverage, and be psychologically prepared for increased volatility.
For example, from its all-time high in April, bitcoin has halved in seven weeks, and other assets have fallen even more. This does not preclude them from returning to their previous levels within a year.
- No need to chase little-known tokens, which allow you to make so-called X's - to increase the amount of initial investment by times. There is a high probability of becoming a participant in the "pumpe and dump" scheme. That's a sharp run-up in quotations followed by their collapse," Chomsky explained.
In the case of tokens, there's a high probability of becoming a participant in a "dumping" scheme.
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