Tips for Choosing the Right Cryptocurrency for Investment

There are so many different digital currencies based on blockchain these days that we can pick from to invest in. Each one has so many factors to keep in mind and that can be overwhelming to many investors. Which cryptocurrencies will survive and which are just a passing trend that will soon fail? Another problem is that everyone always says their crypto solution is the next bitcoin, but that’s too good to be true and unrealistic. You need to set your expectations and do some research. Before your start looking, read these tips to help you navigate all your options.

Risk Levels

There are nearly 1,800 various cryptocurrencies out there right now, but we all know the most stable option is bitcoin. Because it’s the oldest option out there, an investment in bitcoin is quite a safe choice. The current price is now much below its all-time price so it’s not a bad option. Every other coin is referred to as an ‘altcoin’ and there are many other stable choices out there, like Ethereum, Litecoin, and Ripple.

As many investors know, it’s a good idea to keep your investments diverse, so you can think about picking a digital currency that’s more stable and established as the foundation of your investment portfolio. Another type of stable cryptocurrency investment is called the ‘stablecoin.’ These are an excellent option if you want to hold some money between trades, or to place money in a cryptocurrency exchange. These stablecoins are designed to remain stable and limit all price fluctuations by mirroring a fiat currency, like the bitCNY which mirrors the Chinese Yuan.

Research, Research, Research

Reading this is a good first step because you want to find out as much information as possible. Read opinion pieces and discover what the representatives of each company is saying, but you can’t discount the importance of independent research. Look at historical charts for currencies that you’re interested in investing in and look at market caps and circulation – it’s not just about the price.

You also want to look at the full history of the altcoin and how stable it is, or if it’s still in a growth phase. Try to avoid currencies that have experienced large drops in the market cap because that’s reflection of a decrease in demand. Also, look into the company itself that’s offering the coin, and what its goals are. What’s most important is its use cases and trials, as opposed to big promises. Look at the CEO and leadership of the company, their track record, and the technical team behind it.

ICO

ICO stands for the ‘initial coin offering’ and it’s the method of releasing a new cryptocurrency and the company behind it raising working capital. Similarly to the traditional stock market, you would be betting on which company can deliver the altcoin they’re promising so you can deliver on your investment.

ICOs are the way to get in the door when a good opportunity comes around. The problem here is that there are no historical charts, so you have to put extra research into discovering all you can about the company, the team, and the coin offering. How is it different from others out there? Because you’re buying right at the start, you’ll be poised to get some of the best gains if you choose the right ICO. It’s important to know what made a successful ICO in the past so you know what to look for now.

Timing is Everything

There are a lot of important dates that you want to follow to time your trades. Crypto companies will usually announce key milestones, new partnerships, and any other critical dates on their websites, blogs, and their social media (usually Twitter). When you follow these feeds closely, you can find out about these dates before the majority of people, so you can time your trades around these dates.

For this strategy, you need to be a lot more involved, but it can make a big difference in short and long term gains. There’s usually a crucial price jump around those dates so you can anticipate for that and be ready to purchase those coins as soon as the news comes out and the date approaches.

Author's bio

Aimee Laurence, an academic writer for Do My Research Paper, shares her insights on trading, businesses, and cryptocurrency. Her passion is discovering new cryptocurrencies and blockchain technology and figuring out how each will affect companies and people, and how best to leverage them in a business sense.