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Author Topic: You should NOT be buying altcoins now!  (Read 439 times)
dado7
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January 08, 2018, 01:39:32 PM
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Well, if you plan in hodling the altcoins then I think the time for buying is as right as any. Altcoins, especially those small in value (always look at this relatively - you have to check the scarcity, number of the coins/tokens in circulation and total number to be issued ever, that is) have a potential of high returns on investment.

I noticed the advice that they should not be bought especially because it is expected for Bitcoin and Ethereum to rise and they have to gain strength against BTC and ETH first.
That advise is wrong for two reasons:

1. This math is not correct. If you buy 1 ETH (I am using the ETH and not BTC here to keep the math round and easy, while also staying close to the real current value) for - say 1000 USD, and then buy 100 "X" coin worth 10 USD each, here is what will happen if ETH goes up more then the X coin.  
Let's say that X coin rose 10 times and ETH 20 times.
Now your X coin portfolio is worth 100x100 = 10.000 USD. In order to sell them you have to convert back to ETH, so you buy ETH at 20x1000 = 20.000 USD, which means you can buy 0,5 ETH. Now you sell 0,5 ETH and you will earn 20.000 uSDx0,5 USD = 10.000 USD. Yes, you are able to buy less, but it is worth more.

Since your investment at the beginning was 1.000 USD  that means at the end you have increased the value of your investment by 10, the same as you would if you sold the X coin directly.

All of this of course if you don't take fees into account.

2. 2018. will bring us the FIAT adoption on exchanges. Which will both make the above dilemma obsolete and solve the problem of conversion fees.

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