Crypto or cryptocurrency is all the rage right now, and not without reason. Many investors still see it as a viable option, even after a difficult 2022. This is because crypto can yield tremendous high returns in a short time.
The crypto world can be very confusing, especially if you are a new investor. Everything can seem quite overwhelming, and the jargon is confusing. This article aims at making it a bit easier for you to understand how you can choose cryptocurrency, particularly at such a time when the market has been flooded by fake ones.
How do I choose the right crypto?
There is always a buzz when a new crypto coin enters the market. However, you will need to distinguish between fact and fiction. If you are a long-term crypto investor, you probably already know what to look for in your next crypto investment. But, if you are new in the game, you will need help knowing the ropes if you plan to ‘make a killing’. Below are some of the factors you need to consider.
The whitepaper should clearly explain vision: what the currency wants to achieve & the timelines.
White paper
Most digital currencies come with a white paper. A white paper is an official technical document that contains pertinent information on a particular cryptocurrency. This document enables potential investors to further understand the project. There are certain segments a crypto white paper has.Â
Technology
The document should show its underlying technology and how it works, especially if based on new technology.
Team members
It should also include the founding team and any external profiles that can help investors research their history with other projects.
Token economy
The token economy section should include the type of token (inflationary or deflationary), how it will be distributed, and how the token’s value will be secured.
Use cases
This should highlight what problems, solutions, and benefits you might have.
Lockup period
The lockup period refers to a pre-planned time after the sale of tokens when the founders are forbidden from selling their tokens. This is usually a sign of good faith from the founding members. The longer the lockup period is, the more secure potential investors feel.
Partnerships
If there are advisors or partners, the white paper will list them and include any profiles.
Be that as it may, a white paper is not a regulated financial document, and some projects follow best practices while others do not. Therefore, you need to scrutinize the document and do more research before investing in it.Â
Price performance
Different cryptos are valued differently. Therefore, it is important to examine crypto prices before choosing a new one. When a project enters the market, give it a least six months to see how it performs.
Even so, past performance is not the only indicator you should look at. Examine various technical analyses to see if the price will change. Remember, the more volatile the price, the less stable the crypto is.
Market capitalisation
Market capitalization or market cap refers to the complete value of a company’s stock shares. It is a mathematical calculation that involves multiplying a company’s stock price by the total number of shares, in this case, the total number of tokens.
Understanding the market cap will help you know which coins will fall in the large cap(more than 5B), Mid cap (1-5B), Small cap (500M-1B), and Micro cap(less than 500M). The higher the market cap, the less volatile it will be and the higher its liquidity.
Expert analysis
Though friends and family may know a thing or two about investing, listening to experts will help you better understand the market and how these digital currencies actually work. The number of crypto bloggers, influencers, and discord groups has grown exponentially.
When looking at analysts’ predictions online, take some advice with a pinch of salt. Not everyone who calls themselves an expert is one. Research to confirm how well they understand the market and where they are getting their market facts.
Adoption
Another factor to consider when looking for the next big crypto is whether or not the project will be widely accepted in the larger financial market. This is usually affected by what problems the cryptocurrency hopes to solve in the market.
Where can I find new crypto coins?
There are certain platforms you can check out to find new crypto coins.
- CoinGecko
- Token Metrics
- Top ICO List.
- CoinMarketCap
- ICO Bench
Finally
Knowing what crypto you should invest in is a great way to avoid getting scammed and losing all your investments. Though cryptocurrency may be a risk, it is still one you can take and benefit from when you do your research well.
If you can talk to a financial planner or investment adviser to minimise your risks, do so. They will be able to analyse your risk tolerance, liquidity requirements, and how much you can actually invest. Take full responsibility for your investments.
Disclaimer: Investing can be quite a wild ride – especially when you don’t know the terrain! To keep things from getting too rocky, take some time beforehand to get familiar with all of the risks involved. Our site is here to up your investor game by providing all available intel about platforms and trends, but we don’t take responsibility nor can we be held accountable as advisors. That being said, it’s still important for you to make educated decisions that match what works best for YOU – just remember: no amount of savvy will guarantee success or protect against loss so invest money you can spare.
