While altcoins may appear to be green and recovering, they have actually put in a lower low compared to Bitcoin. Image Credit: Pexels

Tensions in the Middle East have subsided and there has been a recovery in the price of Bitcoin and altcoins.
This recovery has led many to believe that we are entering a bull market and it is time to start buying altcoins.
However, my advise is for you to approach the market with caution, as not all altcoins are worthy of investment.
In this article, We'll explore the current state of the market, discuss the factors to consider when buying altcoins, and provide a list of tokens that show potential for growth.
I'll be using Cryptorank.io and Live Coin Watch for all price details.

What's the Current State of the Market?

Bitcoin is currently at a crucial level, as it is fighting to get back into an ascending triangle or bullish flag pattern.
The recovery of altcoins, while encouraging, is not a foolproof indicator of strength. It is important to analyze the total market cap and funding rates of altcoins to determine their true strength.
While altcoins may appear to be green and recovering, it is important to note that they have actually put in a lower low compared to Bitcoin.
This indicates that altcoins have not fully recovered from the recent dip and may still be at risk.
It is also worth noting that the recent altcoin collapse was not solely caused by the tensions in the Middle East, but rather a result of fundamental changes in the market structure.

The Dangers of Bad Tokenomics

One of the key factors to consider when buying altcoins is their tokenomics.

Tokenomics refers to the economic model of a token, including factors such as token supply, distribution, and inflation rate.

Many altcoins have a large number of tokens in circulation and plan to release even more in the future.
This can lead to a saturation of the market and a devaluation of the token.
It is important to assess the market cap to fully diluted valuation ratio when considering an altcoin.
If the ratio is high, it indicates that there are a large number of tokens in circulation compared to the total potential supply.
This can lead to a dilution of value and make it difficult for the token to achieve significant growth.

The Buying Strategy

Based on the current state of the market and the dangers of bad tokenomics, however, approach altcoin buying with a strategy.
Here is my recommended strategy:

Assess Relative Strength

Look for tokens that have shown relative strength during this recovery period.
This can be determined by analyzing how far a token has fallen and how much it has recovered.
Tokens that have recovered the quickest may indicate relative strength.

Consider Cheap and Quality Tokens

Look for tokens that are still significantly below their all-time high of the cycle.
These tokens may present a buying opportunity as they are undervalued.
However, ensure that these tokens have good tokenomics and are of high quality.

Evaluate Market Cap to Fully Diluted Valuation Ratio

Assess the market cap to fully diluted valuation ratio to determine the potential for growth.
Tokens with a low ratio may have more room for growth, while tokens with a high ratio may be at risk of dilution and devaluation.

My Recommended Altcoins to Consider

Based on the strategy outlined above, here are a few altcoins that show potential for growth:

• Rune (RUNE): Rune has shown relative strength, recovering 31% but still down 50% from its peak.
• Arweave (AR): Arweave is significantly undervalued, down 41% from its peak.
• Fantom (FTM): Phantom has shown relative strength, recovering 40% but still down 40% from its peak.
• Ton Crystal (TON): TON has shown resilience, recovering 30% but still down 9% from its peak.
• Near Protocol (NEAR): NEAR has a low market cap to fully diluted valuation ratio and shows potential for growth.

It is important to note that this is not an exhaustive list and further research should be conducted before making any investment decisions.

To sum it up

The altcoin recovery presents a buying opportunity for investors.
However, approach this market with caution and consider factors such as relative strength, tokenomics, and market cap to fully diluted valuation ratio.
By following a strategy and conducting thorough research, investors can make informed decisions and potentially benefit from the growth of undervalued altcoins.

Disclaimer

The information provided in this article is for educational and informational purposes only. It should not be considered financial or investment advice. The author is not a licensed financial advisor or investment professional, and the content should not be construed as professional financial advice. Readers are encouraged to consult with a qualified financial advisor or investment professional before making any financial decisions. The author and publisher of this article are not liable for any financial losses or damages resulting from the use of the information provided.