Investing in cryptocurrency is a great way of making money. Even though the price action of most cryptocurrencies is quite volatile, the overall trend is an upward trend. Nonetheless, you need to invest in the best cryptocurrencies in order to maximize your returns. You want to put your money in solid cryptocurrencies that have a future. But what are the criteria for identifying the best cryptocurrency to invest in?
Here are 5 criteria for choosing the best cryptocurrency to invest in:
1. Trading volume
The trading volume says a lot about a cryptocurrency and whether it is the best cryptocurrency to invest in. A cryptocurrency that has a lot of trading volume implies that it has a lot of believers. This means the price of the coin or token will most likely go up over time. Additionally, you want to invest in a cryptocurrency that you can easily sell when you decide to cash in profits. Lots of volume means your sell orders will be filled almost instantly. Any crypto that has more than $10,000 24 hour trading volume is a good pick.
2. Market cap
When selecting the best cryptocurrency to invest in, market cap is more important than price. This is why the popularity of a cryptocurrency is determined by the market cap rather than the price. Simply put, the market cap is the amount of fiat that is currently invested in a given cryptocurrency. The market cap is important because it gives the true indication of how big a cryptocurrency really is. It is therefore not strange to find a cryptocurrency whose price is cheaper than another cryptocurrency that has a lower market cap.
3. Vulnerability and scalability
Cryptocurrencies are digital assets. This makes them potentially vulnerable to scalability issues. If you invest in a highly vulnerable cryptocurrency, you risk losing your money. For instance, if a certain cryptocurrency gets hacked, its price will drop drastically and there is simply no telling when and if it will bounce back. It is, therefore, a good idea to take some time researching on the cryptocurrency before investing in it just to be on the safe side.
4. Development team
The value of digital currencies cannot be separated from the activities of the developer/developers. Since almost any coder can develop their own cryptocurrency, there are all kinds of scams out there. Some developers are not out to make a difference with their tokens or coins. They are just trying to make a quick buck. Before investing in any cryptocurrency, go through their website and research widely on the team behind the project.
5. Chart history
This is a very important consideration when deciding on the best cryptocurrency to invest in. History has a way of repeating itself and if you study the trading chart history, you may notice predictable patterns. For instance, you can predict how low a price is bound to get. This information is invaluable in managing your risk and knowing the best time to buy.
Most beginners invest in cryptocurrencies based on rumour and speculation but if you want to make money, you need to take time to follow the steps outlined above to determine the best cryptocurrency to invest in. Remember to use a secure wallet to store all your crypto assets. Leaving them on the exchange can result in you losing your money in the event of the exchange being hacked.