Since the introduction of Bitcoin in 2008, cryptocurrencies have only been growing in popularity and value. And today, crypto has slowly risen to become one of the most prominent investment markets.
Cryptocurrencies have certainly attracted the spotlight. With the benefits of crypto, investors everywhere want to dip their fingers into the crypto pool, hoping to earn profits. And with the help of thorough research and careful planning, crypto investments may have the potential to earn investors a significant payout.
Now the real question is, which cryptocurrency to invest in? Having various cryptocurrencies makes it difficult to choose the best place to put your money. Naturally, the goal is to invest money in the crypto coin that’ll bring you a good return on your investment.
With that said, here are some tips and guides on how to choose the best cryptocurrency coins for investments.
Understand What You’re Investing In
There are a lot of newbies in the world of cryptocurrency today, and some may invest in a crypto coin without fully understanding what they’re getting into. One reason perhaps is that it may be based on something they have heard from a friend or influencer. This is far from the best way to invest. If you want to be successful in crypto investing, it’d be beneficial to understand the basic concept behind cryptocurrencies in general first.
Various online resources are available to help explain crypto in-depth. But to give you a brief idea, cryptocurrency is essentially a digital currency used as a means of exchange and is created with blockchain technology. There’s a limited amount available for each cryptocurrency, and more coins come into circulation through a process called mining.
Watch The Market Capitalization
The market capitalization of a crypto coin refers to how much of the cryptocurrency is currently in circulation and the price of the circulating supply. For instance, if you are looking to invest in Polygon, you’d want to check how much it is currently circulating the market. To give you more information, consider checking the Polygon price and price history too.
A good piece of advice worth noting is not to fall into the trap of thinking that it is always a good idea to invest just because the price is low. What you need to do is figure out if the particular coin you’re eyeing will be a good investment for you, regardless of the current price. In other words, you need to understand the future potential this particular coin holds.
How volatile is the currency? How has the coin handled previous market dips? If the price goes down, how likely is it to climb back up? These are some of the questions you should be asking when assessing the best coin to invest in.
You can also look at how much of the coin is currently circulating and compare it to how much it is still available to be mined. Understanding this can help you predict how the market for a particular coin may trend.
Check The White Paper
Every cryptocurrency that’s worth considering investing in will have a white paper. The white paper is a form of documentation for the entire cryptocurrency project, and it is usually found on the product’s website. It explains the goals for the coin and how the team intends to execute its plans.
Generally speaking, the white will provide you with the basic information that you need to know before investing in a coin. It is also your first introduction to the team working on the project, and it will show you how far the project is on its roadmap. If you’re thinking about investing in a particular coin, you should certainly read it.
With that said, as you read more white papers, you’re more likely to get better at identifying which cryptocurrencies are going to take off.
Follow The Community
The success of a cryptocurrency can be largely determined by the community behind it. Cryptocurrencies with strong followings are more likely to be successful and increase in value. More so, a large community means there’s lots of interest and belief in the coin, which boosts the potential for success.
Social media networks are one of the primary places to find feedback from communities following crypto. A bit of research across these communities may help you further understand the technicalities behind coins. This is also an excellent way to keep track of any news concerning your potential investment.
Additionally, you may also consider checking forums to read ongoing discussions to help you decide, and you can also ask about the coin in question.
Study The Trading Volume
The trading volume shows the measure of how much the coin has been traded over the last 24 hours. Following and studying it may help you further understand the coin’s potential success.
For instance, a high trading volume might show that a community of active traders believes in this cryptocurrency. Considering coins with high trading volumes is recommended, as you’ll have higher chances of success by following the statistics.
Knowing this information will allow you to make an informed decision before investing.
Review The Team And Developer Activity
The team is one of the best things to research when considering investing in a crypto coin. Cryptocurrencies are complex, and developing a successful idea takes time and effort. Any legitimate cryptocurrency will have visible development team activity to look back on. More so, looking at the repository is one way to determine the legitimacy of a cryptocurrency, but it’ll only be possible with a working understanding of code.
Of course, there are other ways to determine whether you want to place your trust in a development team. The team’s track record, ambition, and expertise are some of what you can look into. Competitive developers will often answer questions on forums and post frequent updates on their progress with the product.
The team controls the direction the cryptocurrency is heading in, which ultimately has a large impact on the success or failure of the project. This is why it’s crucial to analyze the team behind the coin.
Cryptocurrency has grown into one of the biggest investment opportunities out there. However, identifying which cryptocurrency will succeed can be tricky and challenging, especially if you blindly go into it.
Consider the tips provided in this article every time you plan on investing in a new cryptocurrency. Moreover, with proper research and careful planning, you may increase your chances of picking the best coin to invest in and earn a big profit. Good luck, and happy investing!