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Selecting the best Altcoins, the Gulzar way!

Just like you balance your asset allocation between risky and stable investments, make sure the altcoins in your portfolio do not exceed a certain threshold, lest the novelty and extreme volatility of the coin might adversely affect your returns.

August 19, 2021 / 11:12 PM IST
If an altcoin is trading at extremely low levels, it's best to stay away from it, since trading volumes are a direct representation of the market sentiment and investor confidence in the potential of the coin.

If an altcoin is trading at extremely low levels, it's best to stay away from it, since trading volumes are a direct representation of the market sentiment and investor confidence in the potential of the coin.


Altcoins or digital tokens other than market leaders Bitcoin and ethereum are in rage these days, as investors seek to diversify their cryptocurrency allocations and venture into new waters. And while this might be a fleeting, and almost touch-and-go phase the world witnesses, there’s no denying that there is a certain evergreen-ish quality about some things, be it stock fundamentals, books, movies, or movies more likely and importantly, music. 

Old Hindi melodies, just like timeless investment advice, weather the test of time and relevance very successfully. And when it comes to penning down these heartfelt songs, from Tere Bina Zindagi se Shikwa nahi to Musafir hu yaaron to Satrangi re, it's hard to dismiss the classical significance of Gulzar and his words, which, almost compulsorily form a part of almost all our nostalgic and memorable family evenings, reunions, intimate gatherings and more.

Somehow, his words never seem to lose pertinence and expression, even after 87 years of age, a landmark he celebrated just yesterday. But how does one master the art of effortlessly merging the new and old, the traditional and modern, something as dynamic and nascent as the cryptocurrency market and something as profound as this legend’s lyrics?

His songs, over the years, have held many, many life lessons, and rewinding my Gulzar playlist, I could not help but look out for such gems to properly identify rewarding altcoins in his never-ending list of tracks. Take a look :

Jinke sar ho research ki chaanv, portfolio main achche altcoins honge

Close
Jinke Sar Ho Ishq Ki Chaaon
Paanv Ke Neeche Jannat Hogi

Jinke Sar Ho Ishq Ki Chaaon

There’s hardly anyone who hasn't grooved to this iconic song and re-enacted SRK’s amazing moves atop the train, making its way amidst the rainy mountains. While this song might make you break into impromptu jigs and rightly so, that is certainly not advisable while choosing the altcoins for your portfolio.

Research, research, and research before you deep dive into the uncharted, novel territories of altcoins, including:

  • Management quality, as opposed to celebrities endorsing the coin

  • The underlying technology and its potential applications

  • Social media frenzy versus actual progress

  • Market capitalisation

  • Vision and purpose. 


For this, you can glance over the whitepaper of the currency. As Edul Patel, C0-founder and CEO, Mudrex, explains, “whitepapers provide key information such as practical use cases, scalability, future roadmap, community engagement and growth prospects”. 

Look out for launch dates and steer clear of altcoins which are clearly riding on the back of a bullish cycle and do not have any fundamentals backing them once the run ends and the hype dies down.

Thoda Hai Thode Ki Zaroorat Hai, portfolio main zyada risks lene ki kya zaroorat hai? 

Thoda hai Thode
Ki Zaroorat hai
Zindagi Phir Bhi
Yahan Khoobsurat Hai
Thoda Hai Thode

Ki Zaroorat Hai

Kishore Kumar serenades this eternally soulful song to perhaps explain the many shortcomings of greed, which is generally followed by an unbalanced appetite for high risks. Agreed, many altcoins have been booming, recording good growth figures over the last week, like Solana (82.42 percent), Polkadot (26.97 percent), Cardano (27.63 percent), and more. But, why choose erratic growth spurts over consistent progress? 

Just like you balance your asset allocation between risky and stable investments, make sure the altcoins in your portfolio do not exceed a  certain threshold, lest the novelty and extreme volatility of the coin might adversely affect your returns. Again, steer away from altcoins not available on regulated exchanges.

Per Anant Deshpande, Co-founder at FinBox, credit underwriting expert, and crypto enthusiast, Invest only your surplus, since it's a “frenzied speculative market, Investors must not put all their hard-earned money in these super-risky asset classes. Prefer going mainstream within the alternative, as well.” 

This also means sticking to your basics, like preferring altcoins with a larger investor base and market capitalisation, among others. One way to go about it is to set parameters for your altcoin basket, like choosing from amongst the top 30 altcoins only, or restricting your investments to coins with a minimum market capitalisation worth 5 million dollars, etc.

As Patel further elaborates, “ An Altcoin having a market cap of $50 million, might not grow 10x as fast as an Altcoin with a $2 million market cap. So, for investors who would want higher returns might look at coins with a lower market cap, but within some defined limits”. 

The market is very Satrangi, so you need to watch out
Ishq par zor nahin hai yeh woh aatish ghalib
Jo lagaye na lage aur bujhaye na bane

Ishq par zor nahin hai yeh woh aatish Ghalib

Markets are, indeed,  as volatile and eruptive as Gulzar Sahab describes Ishq to be. And in a space where fortunes are built and demolished overnight, one needs to be especially careful of tracking the daily activities of these altcoins. If the 24-hour trading volume is sustainable, and remains at 50 percent of its market capitalisation, along with traded volumes stay buoyant at 10 percent, it indicates that the coin is liquid, allowing you easy sell-offs in case of a crash. 

If an altcoin is trading at extremely low levels, it's best to stay away from it, since trading volumes are a direct representation of the market sentiment and investor confidence in the potential of the coin.

But remember, when it comes to the crypto markets, you’re as much a Musafir who needs to keep moving and constantly upskill. Read up and educate yourself so that the best trends and cryptocurrencies, be it market behemoths or emerging altcoins, don't escape your eye! 
Ira Puranik

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