If you are someone who knows about cryptocurrency and is interested in it, then you have surely heard the term “altcoin” before. This is a very common term in the crypto space used to describe coins other than Bitcoin.
There are several advantages to buying an altcoin before it goes through a price spike, so if you are interested in finding some information about how you can find altcoins before they spike you should continue reading the information below.
Can You Find Altcoins Before They Spike?
First, you might be wondering whether you can find an altcoin before it spikes. Luckily, the answer is yes! However, there are several risks involved when it comes to finding altcoins before they spike.
Because of the popularity of coins like Bitcoin and Ethereum, there have been hundreds of new cryptocurrencies released to the public in exchanges in recent years. The vast majority of these cryptocurrencies will be worthless and will lose you money. The key is finding a project that is worth investing in.
This is why you shouldn't focus so much on just buying any altcoin with the purpose of getting rich as this could cause you to lose all your money. You will be better off by doing your research and finding an altcoin project that you believe in and will use. In doing so you might be able to find that altcoin before the price spikes and make some extra money for yourself.
What Causes Altcoins to Spike?
There are many reasons why an altcoin might spike in price. Whenever the price of an altcoin spikes it doesn’t do so randomly. These spikes are driven by at least one of the reasons below.
Understanding these reasons and the impact that they will have on the price of the altcoin can help you when it comes to deciding whether you should buy or sell your holdings before or during the price spike. Often times, the spikes in an altcoin’s price are not permanent and might only last for a few days before the price comes back down.
A huge reason why altcoins experience price spikes is due to publicity. It is no secret that social media is a very powerful tool which is why cryptocurrency development teams and cryptocurrency fanatics use social media to promote their altcoins.
The best example of publicity causing the price of an altcoin to spike is when Elon Musk tweeted about Dogecoin which resulted in a huge spike. It shouldn’t come as a surprise that whenever a person with millions of followers posts something on social media supporting an altcoin it can, but may not always, result in a spike in price.
Another reason why altcoins can sometimes experience spikes is due to an increase in demand. Like any other good you can imagine, the law of supply and demand still applies to cryptocurrency.
Whenever there is a spike in demand for an altcoin like right after Elon tweeted about Doge, the price of that coin will naturally shoot up in price. Whenever that demand decreases once again, the price will also decrease.
The Addition of New Features
Lastly, the addition of new features to an altcoin can also be a major reason for a spike in price. At the end of the day, the cryptocurrencies with the most value are the ones that have some sort of use for them.
Out of all of the reasons behind price spikes, this one is perhaps the easiest one to predict before it happens. You can’t really predict when a celebrity will make a post about an altcoin, or when the demand for that coin will increase, but what you can predict is when new features will be added by simply paying attention to forums and news that say when new features will be added.
How to Find Altcoins Before the Spike
Now that you know what causes an altcoin to spike, you might be wondering how you can find altcoins before any of these things happen. The truth is that there is no formula that you can employ.
You simply have to stay informed on what is going on in the crypto world. If you are unsure how to do that or where to start, below are a few examples of things you can do.
Watch/Read the News
This is very similar to reading the Wall Street Journal every morning. Just like stock traders read the newspaper every day to stay up to date on what is going on in the financial world, you must stay up to date on what is going on in the crypto world via cryptocurrency news sites.
By doing this you will be able to know all the information you need to make a decision on whether you should buy an altcoin before a new feature is added that might cause the price to spike. It can also be a great help in deciding if you should sell some of your altcoin holdings if there is a bad announcement related to the project.
Monitor Cryptocurrency Exchanges
Although it won’t be as helpful as staying up to date with news and the timeline of the release of new features, monitoring cryptocurrency exchanges can be valuable in determining when an increase in demand might be taking place.
Most cryptocurrency exchanges allow you to view the volume of that coin that has been traded on that day. This can help you determine if there is an unusual increase in demand that might lead to a spike in price. Some even allow you to set alerts when a coin passes a certain price.
This is more complicated than just reading the news, but it can pay off if you are willing to put in the time to do it.
Research for New Projects
This can also be very time-consuming, but with that being said it certainly has a ton of upside. There are new cryptocurrencies being released all the time. Whenever a new project is released its price will be very low. If you can find a project from its very beginning you will have a much bigger opportunity to make a lot of money. Think about if you would have bought Bitcoin back when it was only a couple of dollars.
Despite this being a great strategy for finding altcoins before they spike, it is also very risky as not every new cryptocurrency released will be as big or even half as big as Bitcoin. In order to avoid investing in projects that will lose you money, you will have to put in a lot of hours to make sure the project you decide to invest in is legit.
Talk with other Crypto Enthusiasts
Talking with people that are experienced in a topic you like is always a great idea. There are many places you can visit online to discuss cryptocurrency projects with other crypto enthusiasts around the world. This can be a great way of finding an altcoin before there is a spike in price.
Even though it is a great way of being exposed to new up-and-coming projects, you should be wary of the advice you receive from people online. Not every one that gives you advice online is an expert on the topic and knows what they are talking about. Just because someone on Discord told you to invest in an altcoin doesn’t mean that you should.
Beware of Altcoin Scams
Altcoins are a great way to make money especially if you can buy them before their price spikes. Altcoins often have tons of potential to get you massive returns on your investments. However, there are also hundreds of scams online when it comes to altcoins.
Thousands of people have gotten scammed online because they invested in an altcoin that turned out to be a scam and they never got their money back, just look at the Squid Games Token which released in 2021. This is why you should always do your own research before putting any of your hard-earned money into any altcoin and never invest money you don’t intend to lose.