Two weeks into the year, the crypto markets are recovering. The price of Bitcoin and Ether is up about 20% each on the seven-day chart. But a recent study on altcoins aims to give crypto investors a break before trading the rally.
When the market makes such a move, crypto traders often shake. They trade to make a profit, create hedges or take long positions in the currency they think will gain the most next time around.
This can result in an increase in volatility in crypto exchange markets. In addition, traders anticipate each other’s moves. As a result, the market can become increasingly volatile with short-term self-fulfilling expectations. While this may seem complicated, crypto trading is worth a world of difference in ROI.
There is a wide range of risks and rewards
For example, while the top three cryptos by market cap gained 20% last week, here’s what some altcoins gained: Cardano (ADA) gained 26%. Solana (SOL) won 70%. Avalanche (AVAX) won 42%. Lido DAO (LDO) rose 42%. Aptos (APT) skyrocketed by 94%.
Cardano is up because ADA’s fundamentals skyrocketed by volume. the TVL (Total Value Locked) has increased enormously. TVL in Cardano for strike soared in January. Trading on its DeFi protocols also increased. There is also buzz around a new ADA stablecoin and dev toolkit for it ADA custom sidechain implementation.
Meanwhile, Citi notes that Solana’s blockchain activity is high. AWS has collaborated with Avalanche to bring its blockchain solutions to businesses and governments.
Lido DAO continues to insist ahead in an exciting race with MakerDAO. Solana pear Aptos is doing well on investor excitement over rapid transit.
It is easy to see why it is tempting to do altcoin shopping. But before you whip out your credit card with your eyes full of big numbers with dollar signs on them, remember to stay vigilant for the downsides. While your main investment can increase by 35 or 84% in a week, it can all disappear just as quickly.
91% of the cryptos launched in 2014 have disappeared
A recent study discovered that 91% of cryptos launched in 2014 are now defunct. In 2017, 704 now-dead cryptocurrencies were released. And 2018 was the worst year of cryptocurrencies extinction, with 751 coins dying on their holders:
“We reviewed data on over 2,400 Coinpsy dead coins and collected data on the current status of each coin. We then analyzed each coin’s performance over the past 10 years, identifying when coins were killed and why.
The study found some common themes in dead coins: scams, pranks, ephemeral ICOs, and ICOs that were abandoned or lacked volume. Here are some red flags to watch out for based on previous failed cryptos: How to avoid crypto carpet pulls. And here are six suggestions for that how to avoid DeFi scams.
However, it is worth noting that the number of failed cryptos should not at all give the impression that cryptocurrency is particularly risky or difficult. This is a failure rate comparable to that seen in the entire economy. New restaurants have a similar one failure rate. New websites died during the Dot Com era and still do.
This distribution also goes beyond commerce. Most outputs of most systems are the result of a small minority of system factors. Crypto is hardly unique in this regard.
It doesn’t mean crypto is too difficult or too risky to learn to use. But it does underline the importance of staying informed, taking it seriously and knowing what you’re doing.
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