Over the years, cryptocurrency has been a financial groundbreaker, providing numerous investment opportunities for those willing to take charge of the digital space. Since the initial launch of Bitcoin, the first cryptocurrency, in 2009, several smart contracts have been deployed, leading to the emergence of over 20,000 cryptocurrencies in todays market.
While some cryptocurrencies solve real-life problems, many are solely built on hype, exposing more investors to perplexing situations. So, its important to understand the fundamental principles of crypto investing to effortlessly navigate market risk. In this article, well explore the approach to evaluating cryptocurrencies and discovering the best cryptocurrency to invest in.
There are specific cryptocurrencies in the current market with huge potential. However, only a few investors who are grounded in market knowledge can discover these crypto hidden gems. To succeed in a volatile market like cryptocurrency, its crucial to build the right portfolio of low-risk assets. Here are the 5 top cryptocurrencies to invest in now:
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The digital form of money has evolved, adopting several innovations to scale its ecosystem. After its recent embrace of Non-Fungible Tokens (NFTs) through inscriptions, Bitcoin has displayed huge potential as digital gold.
The Ethereum blockchain went through several dynamics, and pivoted for growth following its support for Web3 scaling solutions like Non-Fungible Tokens (NFTs), Decentralised Autonomous Organisations (DAOs), the metaverse, and Decentralised Applications (Dapps).
The flexibility of Ethereum in emerging markets is why investors consider it the future of digital finance. With more innovations ahead, ETH may become one of the most lucrative investments in the realm of finance.
The previous Matic network, Polygon, is one of the most innovative blockchains at the moment. Polygon provides open-source opportunities for developers to build scalable decentralised solutions, and as a result, its native token, Matic, may become one of the most valuable cryptocurrencies in the future, making the top list of every crypto investor.
BNB, the native cryptocurrency of the leading exchange, Binance, is attracting the interest of many investors today due to its wide range of opportunities. From the scalability of the Binance Smart Chain to BNB historical data, the coin has a positive outlook for both short-term and long-term investments.
While cryptocurrency assets are volatile, stablecoins like USDT have allowed investors to maintain price stability in recent times. Its real-life use-case case as a store of value makes it a top-tier investment for investors looking to leverage less risky opportunities.
Every successful cryptocurrency project emerged due to several innovative factors, providing an avenue for top-tier investments. Now, lets analyse some of them.
The Bitcoin currency is the first cryptocurrency to ever exist on the blockchain. It was first invented in October, 2008 and later launched in January, 2009 by an anonymous, called Satoshi Nakamoto. Since then, it has continued to revolutionise the world of finance, fostering the innovation of other cryptocurrencies and altcoins.
When a user transfers BTC from their wallet address to another persons address, the transaction is stored on the Bitcoin network and later assembled into blocks, which will be included on the blockchain when every block is mined.
The Bitcoin network operates a proof-of-work (PoW) consensus mechanism. In such a mechanism, the network incentivises miners to contribute their computational power. The stronger a computer, the more likely that it will earn a block reward which is the incentive that the Bitcoin network pays to miners.
Bitcoin halving is when a block reward is a reduction in the Bitcoin block reward. The halving occurs every four years after 210,000 blocks are reached and reduces the block reward by half.
Bitcoin has a total supply of 21 million due to a long-term effect of the halving. Since Bitcoin can only be divided into 100 million units of Satoshi, someday, the block reward will be smaller than the unit of Bitcoin. During this time, there will no longer be new Bitcoin in circulation, and miners will solely earn from transaction fees.
According to Statista, Bitcoin skyrocketed to its All-Time-High of $65,000 in 2021 following the launch of a Bitcoin ETF, BITO, in the United States. Other factors include the IPO launch of Coinbase and Teslas announcement of purchasing $1.5 billion worth of BTC. However, the cryptocurrency plummeted after a crypto exchange and hedge fund, FTX, filed for bankruptcy on July, 2023.
Recently, BTC has continued to experience a price hike due to a combination of factors. On 5 April, 2023, Bitcoin grew by 25% due to the adoption of Ordinals and the US banking crisis. On May 1, 2023, Bitcoin price surged to 47% since June 2022, before the financial company Celsius went bankrupt. On June 1, 2023, Bitcoin volume increased after it declared network support for BRC20 tokens.
In 2013, a developer named Vitalik Buterin proposed the initial idea of Nick Szabo on smart contracts, which later led to the creation of the Ethereum network. How Does Ethereum Work? Ethereum records transactions on the Ethereum database network, which is distributed among several computers (nodes).
Unlike the Bitcoin network, the Ethereum network allows developers to deploy smart contracts and create decentralised applications through open source.
Smart contracts are self-executing contracts executed by computer programmes that remove the need for an intermediary during a transaction. These contracts store transactions on a public ledger, which makes them traceable and irreversible.
Ethereum operated a proof-of-work (PoW) consensus mechanism until September 2022, after the merger. Since then, it has continued to operate on proof-of-stake (PoS), a protocol that helps the network maintain higher security and lower transaction fees. In a PoW, node validators stake capital in the form of ETH into a smart contract.
According to Statista, Ethereums price surged in 2021 after an NFT sold for 38,000 ETH, which was equivalent to $69 million at the time. In 2022, the price declined along with BTC after the cryptocurrency exchange, FTX, collapsed.
2023 is an interesting year for Ethereum. On April, 2023, the successful launch of the Ethereum Shangai Upgrade increased the price of ETH to $2100 before later experiencing a price reduction due to market volatility.
Deciding which cryptocurrency to invest in can be challenging when there are many scam tokens in the market. Considering the potential damage of hype-built cryptocurrencies, you want to ensure that you get substantial value for your time and money. Here are 5 key ways to choose the right crypto:
A website is the research bedrock of every cryptocurrency. Apart from giving you a grasp of its future expectations, its your walkthrough to a sound investment judgement. While a website is mandatory for every crypto project, some criteria require your attention to invest in worthy assets.
Firstly, the language usage on a website can inform you about the end goal of your potential investment. So, you want to examine the spelling, punctuation, and other linguistic elements to prevent falling victim to fake innovators.
While navigating through the website, perform a quick test of the user experience. Even though crypto websites often vary due to their respective protocols, a reputable project must have both straightforward content and a standard interface. Also, ensure that its recently updated so you dont entrust your money to a team thats unwilling to put in the work.
More so, founders are the spearheads of every cryptocurrency project. Therefore, you want to ensure that their real identities are included rather than an anonymous profile. Aside from this, look out for the partners page so you can use their strategic partnerships to gain insights into their core values.
Additionally, thoroughly evaluate the whitepaper page for a comprehensive understanding of the project. A whitepaper is a document that outlines the plans of every cryptocurrency project. However, it should clearly spell out the token goals and objectives.
Community is a core part of every successful cryptocurrency project. As a result, founders employ certain marketing tactics to increase their products reach. Although projects leverage several social media platforms to improve their token awareness, most cryptocurrencies invest their marketing efforts in Twitter, Discord, Telegram, and Reddit.
On their Twitter Channel, scrutinise the accounts longevity, followers, content engagement, and influencer partnerships. If the page was recently created, you want to make sure it doesnt have outrageous numbers of followers within a short time. Otherwise, the project is likely to invest in bot followers, which in some way signals desperation. At the same time, low engagements on big accounts can showcase illegitimate promotion.
More so, join their Twitter spaces and be attentive to how they handle constructive criticism. If they avoid crucial questions or are unable to make necessary corrections, then theres an underlying problem.
Additionally, evaluate their influencer partnerships. The kind of influencers promoting the coin is a reflection of their values. So if their reputation is jeopardised, consider it a red flag. You can also scrutinise their content to discover whether or not they are value-driven. If they post mostly giveaway content to expand their reach, then you may want to take some steps backwards.
While Twitter is the centre of promotion, Discord and Telegram are the homes of every project. The social media channels provide an avenue for founders to build a community around their projects. Therefore, you want to verify that the community is organic and value-oriented. If a channel is flooded with bot followers or pump-and-dump members, then its a red flag. Also, pay attention to how the moderators respond to complaints and suggestions. If they are reluctant to help the members, such an investment is tricky.
The price movement of a coin can provide you with insights into whether or not it is a safe investment. Although cryptocurrencies are volatile assets, this metric can help you decide on what crypto to invest in.
Websites like Coingecko and Coinmarketcap are fundamental tools where you can track the price of your potential cryptocurrency. If the coin is launched, you can use these websites to check the historical data.
Look out for a gradual increase in the price, and if theres an outrageous movement, its a sign of a pump-and-dump project or a rug pull. Scammers pump and dump these cryptocurrencies to make profits off their followers and community. They create hype around such projects through promotions to bait their followers into investing in them for liquidity exit.
Track the price history across different spans, from yearly to hourly movement, and pay close attention to whether theres anything unusual. Also, check the All Time High and the All Time Low to gain insight into the coins future. Combining these metrics can give you insights into the highest and lowest price your potential investment can get, so you can evaluate whether its worth your money.
Every successful cryptocurrency should be a liquid asset. Liquidity determines how urgently you can exchange your coin in the market. When buying or selling a cryptocurrency, youre operating as a liquidity provider to drive the volume of the coin.
The trading volume is a technical indicator that informs you about the authenticity of your potential investment. Investors use this metric to determine a potential upward trend or a reversal. If the volume is high, that can signal that investors are constantly trading it, while a low volume indicates a coin that lacks the faith of other investors.
Moreso, a trading volume can help you validate the markets strength. The metric serves as a yardstick to discover the demand for a cryptocurrency. If theres a change in the asset price in relation to the trading volume, it can help you determine whether the current trend is strong or weak. The asset price and trading volume correlate to showcase investors interest and strike a balance between market demand and supply. As a result, cryptocurrencies experience a drop in value when liquidity reduces and an increase when there are more buyers in the market.
Finally, low liquidity in the market can influence the tokens authenticity. Oftentimes, when investors are unable to sell off their low-priced assets, it creates a pump-and-dump situation for liquidity exit.
Cryptocurrencies showcase their potential through their use cases. A promising cryptocurrency should serve a purpose and offer a solution to real-world problems. Although not all cryptocurrencies solve a practical problem, most valuable coins provide usefulness to the blockchain ecosystem. A prominent example is Bitcoin, which has become a digital gold today as a form of exchange and store of value. Bitcoin allows people to exchange products and services using a decentralised mode of payment. Other notable examples are Ethereum and Polygon, which help developers deploy smart contracts for innovative products within the Web2 and Web3 ecosystems.
However, some tokens are solely built on hype or exist as mere jokes. These types of tokens are regarded as meme coins, and instead of being value-focused, theyre heavily dependent on social media noise. Meme coins leverage community raiders and influencers to push the token and drive the price higher. Although you can make a profit from these kinds of tokens, they are high-risk investments with little or no potential in the future. So, its wise to only invest in such cryptocurrencies when you have extra money that youre willing to lose.
Finally, the utility of a coin can influence its potential price. Whether or not a token has utility can determine its market demand in the future. Since every successful cryptocurrency convinces investors to hold onto the asset, you want to ensure that you put your money in an asset with a potential demand. Frequently Asked Questions
Ive answered some of the most popular questions below.
Despite the existence of thousands of scam coins in the current market, a few of them are hidden gems. To discover these tokens, you can pay attention to their market capitalisation. A market capitalisation is the multiplication of the current price and the circulating supply. The higher the market cap ranking, the lower the risk of your potential investment.
Additionally, use cryptocurrency tools like DefiLiama to conduct in-depth research on the price movement while considering important factors like the whitepaper, utility, and other evaluation methods shared in this article.
There are some promising tokens out there below $1. However, such tokens require in-depth cryptocurrency research. Therefore, you may have to combine both fundamental and technical analysis to draw your conclusion.
Knowing the best crypto to buy may seem challenging, but its not. Youre most likely experiencing difficulties due to several available cryptocurrencies and market speculation. While there are many tokens with no real-life value, assets like Bitcoin, Ethereum, Matic, Binance Coin, and USDT provide usefulness in the cryptocurrency ecosystem. However, its crucial to conduct due diligence before buying any coin and invest only what youre willing to lose.
If you learned something from this post, you may as well check out some of our other interesting articles.
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