I was just talking about altcoins with a LeoFinance community member over discord and the time-old crypto question came up: should I invest in altcoins or should I just put my spare capital into Bitcoin?
My response: it's the dilemma of the moonbag vs. risk-free bet on crypto.
Bitcoin is virtually a risk-free bet on crypto. If Crypto is successful, BTC will be successful. If crypto is unsuccessful, BTC will be unsuccessful. I think most of us can agree that BTC isn't going to get replaced as the top-dog, gold standard in crypto.
Altcoins are a much different landscape. I look at many of them as moonbags: risky bets on smaller projects that - from a financial perspective - are looking to outperform BTC itself.
On MarketCap
Bitcoin has a massive market cap - standing at $320 Billion today.
Many altcoins have a much smaller market cap. Look to RUNE which only has a $424M market cap or HIVE which only has a $100M market cap or LEO which only has a $600k market cap.
It takes a much smaller inflow of capital to double, triple or 10x the price of these altcoins as compared to Bitcoin.
That being said, the reliability of those inflows is much lower: any little thing can put a hole in the ship of one of these smaller altcoins. This vs. BTC which has been through the ringer and is already the gold standard of crypto.
What you're looking at is the equivalent of investing in Apple vs. investing in a small Silicon Valley startup.
The startup has much higher potential returns but Apple is virtually guaranteed to dominate the tech sector for the forseeable future.
On Control
Control is another interesting aspect to this conversation. Let's use HIVE as a great example.
With Bitcoin, you have relatively low control and relatively low impact. That is, your ability to make a difference in the Bitcoin ecosystem is relatively small.
When you look at HIVE, that's radically different. Your ability to make a difference in the Hive Ecosystem is much higher.
You can share content, create content, engage with content. You can play games. You can engage in Discord servers.
You can build a brand for yourself on Hive and use that brand to your advantage and to the advantage of the ecosystem itself.
This level of control can add confidence to your investment in the ecosystem.
For example, holding $1,000 of HIVE and working hard to make a difference to grow the ecosystem vs. holding $1,000 worth of BTC and working hard to make a difference to grow the ecosystem.
Which do you think you'll have an easier time making a positive impact?
My Take
My take on this whole discussion of whether you should put your money into a moonbag or drop it all into BTC is relatively straightforward:
Do both.
Diversification is huge when it comes to investing. Now, you don't want to spread yourself thin and become the master of none. You want to ensure that you have a meaningful amount in each basket such that if you are right then you get paid.
Thus, I hold a lot of Bitcoin but I also hold a lot of RUNE, HIVE, LEO, CUB... Altcoins.
I hold a bag of BTC which is the foundational pillar of my crypto investing. It's the gold standard and it's what I can reliably count on to increase in value as crypto is more widely adopted.
I hold a moonbag in these altcoins which aim to outperform BTC and provide a much higher Return on Investment (ROI) in the long-run.
Obviously, I have taken the "On Control" aspect of this article to the ultimate extreme. With LeoFinance, I am simultaneously adding value to the Hive ecosystem by building a dApp on it and aiming to onboard users while also building value for the LEO token which makes up a significant % of my moonbag portfolio.
Confidence
The confidence I have in having all of this control over the future of LEO (and Hive) is what allows me to hold such a large bag in these altcoins. If I didn't have so much control over these small projects and their future, then I likely would just sit in Bitcoin and not worry about these altcoins.
Thorchain (RUNE) is something I've written about. I'd like to think that I've told a lot of people about RUNE and propogated some ideas about it. My impact there is FAR SMALLER than it is here on Hive and LeoFinance, but it's still much bigger than my impact on the growth cycle of Bitcoin.
So what is an individual investor to do? In my opinion, I like having the big bag of the risk-free play - Bitcoin - and have a big (but separate) bag for the moonbag play - LEO, HIVE, CUB, RUNE... - this balance is important.
The moonbag keeps me busy and building and has the potential to pay off 100x more than Bitcoin, but the Bitcoin bag provides security and knowledge that the future returns are still mine to keep.
Drop a Comment Below - How Do You Separate BTC Investing From Moonbag Altcoin Investing?
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This article touches upon the basic investment advice of diversification, so thank you for bringing this essential concept to the forefront. 😊
When you invest in certain companies, increased shares also contribute to decision-making, depending on the percentages that you hold. A similar concept can be seen in cryptocurrencies which have their own particular use cases, HIVE included. The concepts that are emerging in the cryptocurrency world are mimicking that of older asset classes.
It is true that Bitcoin has the biggest market cap but it will be a waste of time if a person only look at the angle of Bitcoin alone, taking time to Invest in others project that have great potential like Hive and Leo are a good idea to build up our investment.
Because in the near future those moonbag projects with amazing potentials will grow bigger.
This is a good article @khaleelkazi ♥️
Ultimately, we go with what we know. We know enough about Bitcoin that it's a no-brainer to stack as many Satoshi as possible.
As for the altcoins, it makes sense for us to stack LEO and HIVE. CUB and POLYCUB, too, given their origins.
When it comes to the other altcoins-- anything from ETH all the way down to the last one listed on CoinGecko or CoinMarketCap-- we need both familiarity and due dilligence before we choose any (or decide to pass).
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Interesting to read, bro mostly investors not even have enough capital to invest in both Bitcoin and Altcoins
I am talking about investors and traders who have like $500 to $2000 for them altcoin are better but large investors like you who have like $20K to $100K for them both are good options
I agree
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Thanks 🤝
What an interesting article though with an easy going and understandable examples. Yes ofcourse is the fact that BTC has gone through alot of ups and downs lately and still but that doesn't change the fact that it's the almighty when compared with other coins.The Lion is always the king of the jungle no matter what.
Comparing BTC with altcoins will be a misplace of value to an extent cause in no way can these altcoins withstand such pressures that BTC has and still standing strong. Not counting altcoins off though but their are seniority in the two when compared.
From your thought of view, I buy to such idea. Diversification is of essence in that one stands not to loose totally cause even if one fails, the advantage is already gotten from the other holding.
Thanks for this article, u made a meaning to me on this.
We all know it's good to diversify our investment, but most of us don't know we diversifying it all in altcoins. Bitcoin is foundation of Crypto, and is the only project that determine the success of all other project in cryptospace. I myself don't have enough capital to invest in Risk-free (Bitcoin) therefore I diversify only with altcoins Hive and Rune.
The article said it all. For security and an almost guaranteed return, Bitcoin is unmatched. If someone is starting out in the crypto space, Bitcoin should be the first destination (provided they can afford it) before peeking into altcoins.
This is really good when you have enough capital to invest. For small investors, i think holding more hive,loe,cub now will help them to double the money and with time gradually Invest in bitcoin. All the same, it's personal decision
My approach is more about minimizing my expenses. Living frugally is similar to a startup having a long runway. If I can manage through multiple rough years in the market, I don't have to worry about short or even medium term market movements. What is important for me is the maximum potential for ROI + The project's ability to survive till it reach adoption.
Due to this reason, Top 100 Cryptocurrencies makes up next to nothing of my portfolio. At one point CUB + POLYCUB investment I had made up more the half my portfolio. I have not sold any part of my investment and I'm ready to wait few more years to reap the results. I firmly believe that the project is going to outperform the high marketcap cryptocurrency like BTC and ETH.
You could call me a Moonbag pure play who use staking/yield farming to generate passive income to create safety net.
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Love the idea of diversifying and my goals are to get my non-crypto cash flows back up as soon as possible and try to get in while the markets are still weak.
However, like everything else in my life lately, I've neglected work and cash and I'm trying now to do some recouping of lost opportunities.
In anycase, I'm holding and growing my stake in crypto while I figure out my personal finances.
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