Before I answer the question of how to choose cryptocurrency for investments, let me guide you on how cryptocurrency will change the world soonest possible. If you have strong plans to invest in crypto, then the best time to invest in a crypto is now.
If you are a beginner, then even before this, you should start reading with this letter for crypto beginners, and the mistakes all the beginners make.
Whether you are a business person or an individual, it’s necessary to invest in cryptocurrencies because the trend is literally changing. Sooner or later, digital currency will be a global currency, and you will regret not getting into it earlier because the earlier, the better. Only 1% of the world is in digital currency so far, and it will be many times in the following years, and if you invest today, you will make huge profits from other’s investments by just holding it.
Surprised? Let’s elaborate on it.
According to research, 14% of Americans own cryptocurrency now. Next year, the figure will be surprising because most of the adults in the USA have plans to own cryptocurrency in the following year. It’s a fact that cryptocurrency will change the financial system completely, and that’s why most billionaires are acquiring most of the bitcoin at cheap rates.
It’s now over yet.
Most companies have started accepting crypto payments, and now countries have started accepting it as a real currency. El Salvador makes Bitcoin legal tender, and there are many more things to get public soon.
Well, to cut a long story short, if you have plans to buy cryptocurrency for long-term investments, then it’s a perfect time to buy Bitcoin or any other cryptocurrency you choose. But how to choose the currency for your investments is still a question, and let me guide you on that.
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Choosing a profitable cryptocurrency for your investments
There are top 5 things that you must research before buying any digital asset. Investing time in researching these factors will yield huge returns.
The team:
It was just Bitcoin and a few other altcoins (cryptocurrencies other than Bitcoin) a long time ago, so it was not hard to choose the best cryptocurrency for investments, but now it has changed. Now there are thousands of cryptocurrencies, and a few of them have great potential to invest in.
So it has become harder to decide whether bitcoin or any altcoin is good for you.
Look, I won’t suggest you any coin because it’s a matter of finances, but I will make you able to choose the best cryptocurrency for investments, and I am sure with a little research, you will find the perfect one for you, after a while.
The topmost factor that influences a coin is the team behind it. Who is running that digital currency? How strong or committed are they? What’s their vision?
Many questions must arise in your mind once you choose any coin. And once you are clear that a strong company or a passionate guy like Vitalik Buterin, Changpeng Zhao, or Justin Sun is behind a project, it’s a safe investment.
Note: Vitalik Buterin is behind $Eth, Justin Sun is behind $SUN and some other projects, and Changpeng Zhao is behind $BnB but don’t go for them until you read the rest of the part and make it clear that those are suitable for you.
Sometimes the CEO of any coin isn’t influencing the coin, but any other billionaire runs the coin. The biggest example is $Doge, it’s among the top 5 coins, and Elon Musk is behind this project because he has held most of $Doge since 2019. Still, I don’t recommend $Doge because of its unlimited supply and a couple of other factors.
The technology:
If you have long-term plans – for years – then it’s far better to check the technology of the coin you choose because only those will survive, which are highly advanced can compete with time.
So far, $Eth is one of the best ones in terms of technology.
But if you have short-term plans, you can avoid this factor because it’s a bit technical. You can check other factors.
A question may strike in your mind how can you leave one of the most important factors? The answer is that day traders or short-term traders focus on profits rather than technology and other factors. And they make profits with (even) shitcoins as well. I recently found a coin $Kishu that was rug pulled by traders, and it was just one month older.
So it depends on what you want to do with your investments. If you have long-term plans, then invest a lot of time learning about a coin you are investing your money in, and if it’s short-term, then it can be any meeting other essentials.
The whitepaper
A whitepaper is a roadmap and vision of the team behind the coin. What the team wants to do with that plan and how they are making it true.
Search for the whitepaper of the coin, and if you find that they have long-term plans and are working on it, this could be safe.
But if they have the whitepaper but they aren’t following their words, it’s risky.
Previous price charts
Previous pricing charts may or may not affect the coin, but it’s still essential to analyze it quite well. There are two reasons for which you must do it.
- To check if it’s not involved in dumps and pumps. You can check the $NAX pattern. It’s usually pumped and then dumped, and there are many other coins.
- Traders usually believe that coins repeat the pattern. That means that traders usually believe that a coin will keep on following its pattern for at least some time, and it does.
However, these two reasons can’t be the only pillars for long-term investment plans because if investors or any billionaire pick any coin, it will spike soon. So it’s great to get in touch with news to get such signals.
I hope you understand the importance of checking the chart and not making it base for long-term investments. Even if the chart isn’t good, if you believe that the roadmap, the team, and the community of a coin are great, then the charts aren’t that important because everything changes with investors’ minds.
The Community
Why it’s important to check the community of a coin? Does it matter?
Yes, it does.
Just keep in mind that a coin’s value depends on the coin’s circulating supply and the market capital. That means if the community swipes money off, then you can lose a lot of your money.
For example, if the price of a coin is 10 dollars with a specific circulating supply and its market cap is $10M, if $5M is withdrawn from the coin, then the price will be $5.
It means it totally depends on who has invested money in the coin and why they are holding it. Sometimes, people invested money in a coin, and the value went down; investors keep on waiting for a time when the price will reach back, and they will move away! The price will again come down.
So it’s far better to check who and why holders are holding it. This research isn’t hard. You can explore Twitter and a relevant subreddit on Reddit to meet the holders and check their mentality.
Marketcap & Supply
In the previous example, you must have learned that market capital and the supply of a coin affect the coin’s value a lot. If investment increases, then the value will rise, and if the supply increases, then the coin’s value will drop.
It’s quite simple math.
But the other important thing for which I thought to make an extra heading is quite different. Market capital has great significance in making profits and also in safe investments.
If a coin has some cool investments for some time and it’s slightly increasing or managing to be there, that is a good sign that it’s a safe investment.
On the other hand, if the market capital is huge, it’s a sign that this specific coin will take more time and investments to increase value. In simple math, a coin that has a $20M volume requires $20M more to double in value, but a coin with $30B investments requires $30B more to double in value.
Did you get this point?
Let me make it a bit more simple, if you invested your money in a coin that has less but reasonable market capital, then it’s safe and has huge potential to $x your investments in a short period, and if the market capital is huge, then it may take more time to double your money. You can check the market cap here.
But keep in mind that all the factors have a combined effect, so you can’t go for one factor and leave the others. Some coins like $BnB and $Eth are quite safer and still have huge potential despite their huge market caps, and thousands of other coins with low volume might take years to double or triple.
It’s about investments, so it’s far better to choose safer coins that are still undervalued.
The marketing
Last but not least, marketing strategies matter a lot. If the owner is investing in marketing and getting it listed on new exchanges regularly or offering something cool to staking it, this could be a safe investment.
Getting listed on exchanges makes a $coin available for trading on different platforms, so investors are interested in trading with it. And staking is also a marketing strategy. People keep investments for a specific period and get rewards.
Just look at $Cake; they started offering handsome returns on staking, and its value spiked within no time. There are many other coins that you can check that is still undervalued and has great potential.
Final words:
Investing money in cryptocurrency is risky, so I would never tell you which cryptocurrency you should pick for your investments. But I can make you able to understand how to choose cryptocurrency for investments with appropriate and practical knowledge.
There are some essential things that you must learn before investing your money in any digital currency, and the most important ones are the team, the technology, and the community. It’s far better to focus on these factors a lot before putting your money.
However, for some sound multiples finding highly undervalued coins could be interesting. Which coin did you choose that you believe undervalued and safe? You can tell me in the comments and also reach me on Twitter here.
By the way, you can use the following links to join any of the top exchanges to buy your cryptocurrency for your safe and profitable invesments. It won’t cost you but it will help us keep running this blog.