The Power of CoinMarketCap
I’ve been trading altcoins for a few years now and many tools have bubbled to the top as useful. On the inverse, just as many tools have proven to be unuseful.
CoinMarketCap has secured its position in the cryptocurrency community as the place to find out about “on the rise” altcoins.
I am not one to tell people how to place bets on a wildly volatile market, but I do have a few tips that have proven to be effective in identifying above average “bets.”
When conducting research similar to how the old school stock brokers used to, you have to be careful for pump and dump scams. In attempt to avoid this, find the source of the coin (Litecoin fork vs Bitcoin clone), it’s website, the volume it is trading over 24 hours, and what exchanges it is available on.
Using CoinMarketCap lets you filter through the altcoins that have just launched onto major exchanges which can be a filter on its own. They also send out alerts when new coins have hit the index allowing people to begin their research:
Most cryptocurrency exchanges have voting criteria that all currencies must meet before they accept them. For example, if your altcoin gets 1,000 votes to be on the exchange, they will index the coin and it will begin trading. They are proving that there is enough demand for the coin before taking the time to index it. Why? Because exchanges make their money off transactions. More demand = more transactions.
I recommend going deeper than the top 10 coins when researching on CoinMarketCap:
I go for the altcoins that have the highest risk and highest potential upside. These are usually the coins sitting around the 50 to 100th position:
These altcoins have very low volume so you want to stick with currencies trading at least $1k per 24 hours. In my experience placing bets on 5-6 coins is the best diversification. At least half the coins will tank but the other half can give you a multiple.
Last year, I placed a bet on X11coin which grew over 400% in 48 hours jumping from the 50th position to a top 10 currency. I also saw some success with Silkcoin when it went on a 72-hour explosive rise. These were both coins that had just launched on multiple exchanges and were sitting in the 50-100 range.
Regardless, however much you monitor CoinMarketCap or the cryptocurrency market as a whole, you have to know that it can vanish at any point.
“The cryptocurrency industry is currently like the broadband stage of where the internet was in the 1990s.” – The Winklevoss Twins
I recommend monitoring coins for a few days before putting any amount of cash into them. Watch the exchanges you are trading on especially when it comes to Altcoins. If you are a little more risk adverse, I compiled a list of the top 20 bitcoin exchanges.
In summary, CoinMarketCap is a powerful resource tool for finding new “up and coming” altcoins and if you are going to get into trading go for the 50 to 100 range because they have the highest potential for growth.