CryptocurrencyAlternative Coin
Altcoin
Any cryptocurrency other than bitcoin, ranging from large established networks to thousands of tiny, illiquid and short-lived tokens.
What Altcoin means
Altcoin is a catch-all label for every cryptocurrency that is not bitcoin. The category is enormous and internally incoherent: it includes major smart-contract platforms with years of operating history and billions in value secured, payment-focused coins, privacy coins, infrastructure tokens, governance tokens for individual protocols and an endless tail of meme tokens created in minutes with no development behind them. Grouping them under one term is convenient shorthand but hides differences in technology, liquidity and legal status that matter enormously.
Traders watch altcoins because their volatility is higher than bitcoin's in both directions, and because capital tends to rotate. Money frequently moves from bitcoin into large altcoins and then into smaller ones during risk-seeking phases, and reverses sharply when conditions turn. Correlation with bitcoin is high most of the time, so an altcoin portfolio usually provides far less diversification than the number of positions suggests, and a broad market decline tends to hit smaller tokens hardest and fastest.
The risks scale down with market capitalisation. Thin order books mean a modest sell order can move the price several percent, and the same thinness makes prices easy to manipulate. Concentrated token allocations held by founders and early investors can be released on a schedule that dilutes later buyers, projects are abandoned regularly, and some tokens are or may later be deemed unregistered securities in major jurisdictions. Very few of the thousands of altcoins launched in any given year still trade meaningfully several years later.
Worked example
A token with a 40 million USD market cap and 300,000 USD of daily volume can move 10 percent on a single 50,000 USD sell order, which is why position size in small altcoins is limited by liquidity rather than by risk appetite.
Related terms
- Bitcoin (BTC)The first decentralised cryptocurrency, launched in 2009, secured by proof-of-work mining and capped at 21 million coins.
- Ethereum (ETH)A programmable blockchain whose native asset is ether, running smart contracts and secured by proof of stake since the 2022 Merge.
- Crypto Market CapA token's price multiplied by its circulating supply, used to compare relative size but easily distorted by supply assumptions.
- StablecoinA crypto token designed to hold a steady value against a reference asset, usually the US dollar, by collateral or algorithmic means.
- VolatilityThe magnitude of price fluctuation over a period, usually measured as the standard deviation of returns or as an average range.
Frequently asked questions
What does Altcoin mean in forex trading?
Any cryptocurrency other than bitcoin, ranging from large established networks to thousands of tiny, illiquid and short-lived tokens.
How does Altcoin work in practice?
Traders watch altcoins because their volatility is higher than bitcoin's in both directions, and because capital tends to rotate. Money frequently moves from bitcoin into large altcoins and then into smaller ones during risk-seeking phases, and reverses sharply when conditions turn. Correlation with bitcoin is high most of the time, so an altcoin portfolio usually provides far less diversification than the number of positions suggests, and a broad market decline tends to hit smaller tokens hardest and fastest.
What is an example of Altcoin?
A token with a 40 million USD market cap and 300,000 USD of daily volume can move 10 percent on a single 50,000 USD sell order, which is why position size in small altcoins is limited by liquidity rather than by risk appetite.
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