The altcoin market is growing, with more players regularly entering the game. Bitcoin, Ethereum, Ripple, Litecoin and others experienced a surge of interest in 2017, and cryptocurrency analysts expect the trend to continue, particularly among millennials. Blockchain Capital conducted a survey which found that 30 percent of millennials would choose to invest in Bitcoin before investing in government bonds or stocks.
Although cryptocurrencies are still a volatile market, it seems the bubble is not bursting. However, individual investors may see their bubble burst if they do not track their investment regularly. Andrew Arnold writes in Forbes that crypto investors should beware of bots that influence the market, should understand how much they can afford to lose and to discipline themselves when prices surge.
Bots are being used to artificially manipulate the market. Bots flooded the Neo currency market and caused a “flash-crash.” This caused many investors to sell and the bot programmers took advantage of the situation. Analytic software can monitor exchange behavior and alert investors when there is suspicious trading. For those who do not have the software, Timothy Tamm, a co-founder of CoinFi, recommends watching for trading patterns that affect price momentum and volume. Patterns indicate bot activity and investors are advised to refrain from reacting to these manipulations.
Undisciplined crypto investors can experience harsh reality when trends end. Financial analysts warn against the fear-of-missing-out mentality. When investors are in FOMO-mode, they buy when alt-coins are on the rise and sell when the price is falling. This kind of over-trading can negatively impact overall financial gains, especially when exchange fees are high. Experts recommend holding on to crypto-currency and not reacting to market fluctuations in real-time.
Another way to become a wise altcoin investor is to understand limits. Like other investors, crypto-investors maintain a portfolio. Before setting up a portfolio, smart investors determine their stop-loss level based on their tolerance for risk. With that number established, even high-risk investors are advised to maintain a high percentage of fairly stable altcoin investments and a lower percentage of high-paying, volatile coins.
As millennials enter into a new market that seems to have very few rules and a very short history of ups and downs, they are forced to make hard decisions and will likely feel the burn of mistakes. So while the crypto bubble hasn’t burst overall, following expert advice can diminish the number of individual crypto-currency bubble busts.