Data analytics has been the basis for the cryptocurrency market for years. In 2018, a study from the University of Bremen in Germany discussed some of the implications of big data for the altcoin industry. They found that predictive analytics algorithms were using social media data to forecast asset prices.
Predictive analytics have become even more influential in the future of altcoins in 2020. Recently, this summer has been dubbed the “season of altcoins.” This wouldn’t have been the case without growing advances in big data and predictive analytics capabilities.
Predictive Analytics Continues to Shape the Altcoin Market
Sales of alternative digital coins were so impressive this past summer that some pundits in the crypto currency market have called it the “Season of Altcoins”. With growth continuing of bitcoin alternatives into the fall, more investors are eager to try their hand at tapping into potentially explosive earnings.
But it’s clear they need help in choosing the best altcoins to buy from the more than 2000 high-risk cryptocurrencies available. Some people might have been overly optimistic about the future of the market. This is where predictive analytics is becoming so important. Data analytics tools have made it easier to identify the long-term viability of altcoins as an investment.
The simple definition of an altcoin is any digital currency that is not Bitcoin. The very first cryptocurrency, Bitcoin dominates the business, holding $195 billion, or 58 percent, of a $336 billion market.
Do Predictive Analytics Algorithms Show that Altcoins Are Giving Bitcoin A Run for Its Money?
Some industry experts suggest altcoins threaten Bitcoin’s market supremacy. That appears unlikely, however, even with the momentum of the 2020 altcoin season driving continued growth. But it is true that altcoins offer competition in specific areas. Most altcoins are rooted in Bitcoin technology. Developers try to improve on a specific feature or two – transaction speed or distribution method, for example.
Predictive analytics tools have started to tap a number of new sources of information. This market data includes macroeconomic data that is correlated with traditional cryptocurrency markets. They also include regression analyses with real-time data on the altcoin exchanges.
Ethereum, market cap runner-up to Bitcoin, has set its sights on becoming the largest platform for decentralized applications and smart contracts. And, number three Ripple focuses on legacy banks with products offering transaction settlements in as little as four seconds.
Predictive Analytics Based Trading Tips – Where and How to Invest
Traditional investment firms generally have shunned crypto trading. The best bet for investors looking to get started in the crypto world is to find an established trading platform that can tailor services to specific goals and needs.
Beyond obvious features like transaction security and trading fees, the investor should look for some subtler attributes. Online educational resources can prove invaluable in sharpening crypto trading skills. Also, a trading platform community provides access to the experience, ideas and know-how of fellow investors that form a treasure trove of information for the investor.
You can use predictive analytics tools that are capable of mining data from these exchanges. This information can help forecast important price movements far more accurately than other sources.
How should one invest in altcoins? Very carefully. Common-sense approaches bolster chances of a successful experience in the altcoin market. For example, start with the top dogs – Ethereum, Litecoin, Ripple, Tron, EOS and Verge. And invest in more than one of them. With time and experience, other altcoins can be considered.
Be aware that hundreds of cryptocurrencies have come and gone over the past decade – some of them in what seemed like a blink of an eye – as they lured investors with the evaporating “promises” of huge ROIs.
High Profit Potential Matched by High Volatility and High Risk
It is nevertheless true that many crypto investors have done very well. Some have harvested breathtaking financial rewards with the most modest investments. It’s difficult to say how much smart thinking, good timing and even dumb luck played a role in such success.
What is clear is that high volatility and high risk mean that “caveat emptor” was never more applicable than in the crypto marketplace. Most wise is the investor who ventures into the market only after considering all the pitfalls as well as the potential.
Predictive Analytics is Critical to the Future of Altcoins
The 2020 Summer of Altcoins continues to spur market growth in the crypto alternative to Bitcoin. This wouldn’t have been possible without advances in predictive analytics. Proven products like Ethereum peg its success to a strategy that targets gaps in the Bitcoin model. These products purchased on established trading platforms offer the best chance for success in a volatile, high-risk market. Investors that use predictive analytics tools will be able to make much more informed forecasts.