Should you touch altcoins? How big a slice won't break you
The pull of altcoins is easy to understand — who isn't tempted by a story of something going up several times in a month. But there's no shortage of them sliding all the way to zero, either. This piece won't tell you to stay away; it'll help you think through one thing: if you're going to touch them, how much money and what slot.
When the market is hot, group chats fill up with people showing off how many times some small coin has multiplied, and plenty of people can't resist. They put a chunk of money in, make some, lose some, and may well run into one that later goes almost to zero. The thing worth learning isn't how to squeeze out a bit more — it's keeping altcoins in the spot they belong: a corner where it wouldn't matter if you lost it all.
So this piece won't take the moral high ground and tell you "don't touch them." That kind of advice rarely lands; people who want in usually can't talk themselves out of it. I just want to walk through the math with you: if you're going to touch them, how to do it without doing real damage.
What counts as an "altcoin"
Put simply, apart from the few biggest, strongest-consensus names like bitcoin and ethereum, the thousands of remaining tokens can mostly be tossed into the "altcoin" bucket. Some of them are real projects with real uses and teams doing the work; a great many are pure hype on a concept, or outright scams from the start.
The trouble is that for a beginner, telling those two apart is extremely hard. Every project's whitepaper reads dazzling, every community looks on fire, and you can rarely tell before you buy which one is genuinely building and which one is there to harvest you. That "you can't see clearly" is itself the biggest source of altcoin risk.
High volatility plus a high zero rate — that's the baseline
Altcoins have two inescapable traits you have to acknowledge before buying.
One, they swing harder than the large caps. A roughly 77% fall in bitcoin during a deep bear is already terrifying — it hit a high of around $69,000 in November 2021 and at one point dropped to about $15,500 by November 2022 (from public market records). Over the same stretch, plenty of altcoins fell far more than that; drops of over 90% were commonplace. They rise faster than anything when things are good, and they fall just as fast.
Two, going to zero is a real ending. Large caps fall hard too, and nobody can promise when, or whether, they come back — that 77% above is the example. But an altcoin has one more possible ending: the project can lose all value outright — a team that walks away, tech that never ships, a narrative that completely collapses — the price goes to zero with no volume left. This isn't a low-probability event; crypto history is littered with projects that fell. Either can leave you underwater for years; an altcoin adds a route to losing the principal entirely.
Because of that zero risk, the money you buy altcoins with has to be money you can accept "all gone." That's the same thing as the "spare money only" rule I keep harping on — exactly what counts as spare money, I wrote up separately in What "spare money only" really means.
If you must, treat it as a small "satellite"
The way I do it now is to picture my whole crypto position as a "core plus satellite" structure.
The core is the part I plan to hold long-term, with somewhat lower volatility — usually the large caps, which can still fall deeply. The satellite is the little sliver I use to reach for high upside while knowing full well it could be a total loss — and that's exactly where altcoins belong.
The beauty of this structure is that it draws a circle around altcoins from the start: you can gamble, experiment, and take high risk inside the circle, while the position cap limits how much is exposed: if any single satellite blows up, the loss stays inside that small slice. The core can still fall and still faces platform risk; it just doesn't carry the extra risk of a project going to zero. How to split that "core and satellite" I covered in a whole separate piece: Core and satellite: how to arrange your money. Here I'll just stress one thing — altcoins are always a satellite, never the core.
How much? One hard line
There's no standard answer on the exact share, but here's a hard test you can use:
Add up all your altcoins. If they all went to zero tomorrow, would it break you?
If the answer is yes, you've bought too much. What this line means is that altcoins as a whole can only be a small block of your crypto position. Many people keep the whole satellite slice under 20-30% of their crypto position, and any single altcoin smaller still — you have to assume any one of them could go to zero, so you can't let one coin's collapse flatten you.
My own dumb rule is this: each altcoin's size is small enough that even if it went straight to zero, I'd only frown at my account — I wouldn't lose sleep, I wouldn't think about borrowing money to win it back. The moment any altcoin's size grows big enough to affect my mood, I know it's time to trim. Whether you can sleep is a more accurate gauge than any percentage.
To translate "how much I can afford to lose" into a concrete cap on altcoins, you can use the position calculator to work out the total drawdown you can bear first, then slice a piece of that down to the satellite.
Never make altcoins the core
One of the most common beginner mistakes is getting swept up by some altcoin's moonshot story and, without noticing, turning it into the biggest block in your position. This is extremely dangerous — you've effectively staked the fate of your whole portfolio on the thing most likely to go to zero.
One structure to watch out for: no core built up, yet heavy bets on three to five altcoins — you feel on top of the world when they pay off, then hand it all back with interest when they don't. That structure is, at heart, no different from gambling — it just wears the word "investing."
So no matter how moving an altcoin's story is, I remind myself: it's there to be the cherry on top, not the ballast. Ballast is the core's job. When an altcoin rises, it's a pleasant surprise; when it goes to zero, it was expected — that's the mindset that lets you hold steady. If one day you find an altcoin growing bigger and bigger in your position, that's when you trim it back to the satellite slot per your plan — which is also one of the things rebalancing is for, as I discussed in Do you rebalance, and how.
Recap
To wrap up: altcoins aren't untouchable, but their high volatility and zero risk mean they only deserve to be a small satellite position in your portfolio — bought with money you can lose, with the share capped hard, each single position small enough that going to zero won't break you, and never the core.
Put them in the right slot and you can reach for that bit of high upside without getting gutted by a single zero. That's the safe distance an ordinary person should keep with altcoins.
Frequently asked
Should a beginner buy altcoins at all?
Not strictly off-limits, but never as your main position. Altcoins swing harder than the large caps, and historically a huge number of projects ended up at zero or never recovered. If you really want a try, use small money you can afford to lose entirely, parked in the satellite slot of your portfolio.
How big should altcoins be as a share of total position?
No standard answer, but the thinking is: they should be the satellite part of your crypto position, not the core. Many people keep the whole satellite slice under 20-30% of their crypto position, and any single altcoin smaller still, so that any one of them going to zero won't break you. The exact share depends on how much you can afford to lose.
Do altcoins really go to zero?
Yes, and it isn't rare. A project can lose all value to a team that walks away, tech that never ships, a narrative that collapses, or a plain scam; the token goes to zero with no volume left. Large caps can also fall hard and stay down for a long time, but a project going to zero outright is an extra layer of risk that altcoins carry, so buy altcoins only with money you can write off entirely.