Finding the right altcoins to invest in is a skill that separates successful crypto investors from the rest. The problem is that there are literally tens of thousands of coins, and 99% are either BS coins or scams.
This guide will show you two simple but effective methods to discover new altcoins: exploring by sector or diving into coins on specific blockchains.
1. Find New Altcoins by Sector
The crypto market can be divided into sectors like DeFi (Decentralized Finance), Gaming, Layer-2 Solutions, and DePIN (Decentralized Physical Infrastructure Networks). Each sector represents a specific area of innovation, and identifying sectors poised for growth can help you pinpoint promising altcoins.
Here are the major sectors and a short description of each one:
Here are the sectors, ranked by how risky they are:
Risk level 1: Index (Bitcoin)
Risk level 2: L1, Infrastructure
Risk level 3: L2, DeFi
Risk level 4: DePIN
Risk level 5: GamFi, AI
Risk level 6: Meme, Metaverse & NFT
Finding coins in different sectors is one part of a broader three-step portfolio system.
Steps to Find Coins in a Sector:
Step 1: Identify a Sector with Growth Potential Look at trends in the crypto market. For instance, DePIN is gaining traction as a way to connect blockchain technology with real-world infrastructure. Gaming and new Layer One solutions are also experiencing rapid adoption.
Step 2: Use Sector-Specific Tools Platforms like DeFi Llama can help you explore coins within specific sectors. For example:
Use the categories section to view coins grouped by sector.
Sort by market cap or total value locked (TVL) to identify leading projects.
Another tool I use to find coins in specific sectors is Coin Rank, which gives you a list of the sectors and a bunch of coins in each.
Step 3: Analyze Each Coin’s Position in the Sector Evaluate whether the coin solves a real problem and how it stacks up against competitors. For example, in the Oracle sector, Chainlink dominates in TVL and adoption. If you spot a smaller competitor making gains, it might be worth deeper analysis.
For a fuller framework, see my guide to fundamental analysis and comparing projects within a sector.
2. Finding New Altcoins by Blockchain Ecosystem
Another effective way to discover altcoins is to focus on specific blockchains like Ethereum, Solana, or newer players like Sui. Blockchains often attract ecosystems of projects, creating opportunities to find altcoins before they become mainstream.
Steps to Find Coins on a Blockchain:
Step 1: Choose a Blockchain with Momentum Ethereum, the largest blockchain for altcoins, is a great starting point. However, newer chains like Solana, Sui, and Avalanche often host innovative projects due to their unique advantages (e.g., lower fees or faster transactions).
Step 2: Explore the Ecosystem Visit sites like DeFi Llama and view all the projects built on any given blockchain. You'll find tons of projects and a summary of their main metrics immediately.
Just click on the chain you want to dive into and scroll down a bit.
Combining The Two Approaches
You don’t have to choose between these methods. Instead, combine them:
Start by identifying a sector you’re excited about (e.g., DeFi).
Narrow your focus by exploring coins within that sector on a specific blockchain (e.g., Solana-based DeFi projects).
Pro tip: Look at what's been highly successful in each of the sectors on Ethereum (the most established chain) and find the "Solana version", or "Sui version" of that project.
For example, Uniswap (UNI) is the largest decentralized exchange on Ethereum. Both Solana and Sui have their "version" of Uniswap, called Raydium (for Solana) and Cetus (for Sui). Both projects could benefit if their respective chains grow.