【Wanwan Says】

What are the risks of buying altcoins? How to filter out high-quality altcoins?

1. Low Survival Rate

The altcoin market carries high risks. About 90% of altcoins disappear every year, with trading volumes close to zero, meaning that most altcoins cannot exist for the long term.

2. Manipulation Risk

Additionally, some altcoin communities have groups that drive prices, causing rapid increases through hype and promotion; however, this manipulation risk may ultimately leave some investors as "bag holders."

3. Lack of Technological Innovation as a Challenge to Industry Development

Although altcoins have brought a large inflow of capital, they generally lack technological innovation. This lack of technology-driven phenomena may affect the innovative development of the cryptocurrency industry in the long run.

How to filter out high-quality altcoins?

‌Choose coins that have been listed for more than six months: Such coins have usually undergone initial market testing and are more likely to attract attention and capital inflows.

‌Avoid newly listed coins with VC chips worth more than five times that of retail investors: Before buying, carefully review its fully diluted valuation (FDV), compare it with the last round of private placement and current price, and evaluate it against other Layer 2 valuations.

‌Look for coins with obvious bottom signs: This means they may have hit bottom and are starting to attract more buying interest.

‌Observe gradually increasing trading volume: This may signal that institutional investors are starting to build positions.

‌Choose coins with revenue: Whether it's protocol income or service income, projects that can sustain their teams with their own cash flow do not need to frequently cash out. If income can also be linked to coin prices, such as through buybacks or dividends, that's even better.$BTC $ETH