#Gate广场万圣节 Criteria for Selecting Quality Altcoins

Three things matter most when evaluating quality altcoins: whether the project can generate revenue, whether the token entitles holders to returns, and whether the valuation and token distribution are reasonable. Picking based only on market cap or how much a coin has fallen can easily lead you to buy a recently launched token with high inflation.

1. First, screen for business quality
People use the product: prioritize active addresses, trading volume, and protocol revenue. For DeFi, also look at total value locked, meaning the amount of funds users have locked in the protocol.
Revenue benefits the token: buybacks and burns, staking rewards, and fee distributions all count. The more the project earns, the more likely token holders are to benefit.
The sector has real demand: public blockchains, Layer 2, DeFi, AI infrastructure, and RWA are all possibilities. The key is whether the project is a leader in its sector.

2. Then, assess tokenomics
Circulating supply ratio: The higher the circulating supply as a share of total supply, the lower the selling pressure from future unlocks is typically likely to be.
Unlock schedule: Focus on the next six to twelve months. Ahead of large unlocks, the market often needs to absorb the newly released tokens over time.
Valuation: Compare market cap, fully diluted valuation, and projects in the same sector. Fully diluted valuation is the theoretical market cap if all tokens were in circulation.
Holder concentration: If the team, investors, and market makers hold too large a share, this can create concentrated selling pressure.

3. Finally, look at market signals
Bitcoin’s trend: Altcoins usually follow Bitcoin. Capital is more likely to flow back into the sector when BTC stabilizes and the ETH/BTC exchange rate strengthens.
Trading volume confirmation: Falling volume during declines and rising volume during rallies indicate easing selling pressure; a sustained high-volume breakdown signals weakness.
Liquidity: Prioritize major exchanges, spot market depth, and stablecoin trading pairs. Small-cap coins can rise quickly, but there may also be few buyers when you want to exit.
Catalysts: For mainnet launches, protocol upgrades, and institutional partnerships, assess whether the good news is already reflected in the price.

Practical screening process
1. First, screen for projects ranked in the top 100–300 by market cap, and exclude projects with anonymous teams, unlimited token issuance, or closed-source core code.
2. Remove projects with large unlocks in the next six months, a low circulating supply ratio, or highly concentrated token holdings.
3. From the remaining projects, pick those with growing revenue, active users, and a top-three position in their sector.
4. Compare valuations within the same sector, and keep only candidates with improving fundamentals whose prices have not yet run too far.
5. Build positions in stages, and write down in advance: what price to buy at, how many batches to buy in, what would trigger a stop-loss, and what would trigger taking profits.

The current market increasingly favors selective picking, with capital also concentrated more heavily in Bitcoin and Ethereum. Altcoins still face significant leverage, thin spot liquidity, and selling pressure from token unlocks. They are better suited to spot trading, while futures trading can multiply the risks.